Don’t ask a VC to sign your NDA
I have bad news: Your idea isn’t as unique you might think.
I have good news: Ideas matter much less than the execution.
Because of this, in 1:1 conversations or even first meetings with VCs, no one is going to sign your NDA (Non-Disclosure Agreement).
VCs typically avoid signing NDAs for four key reasons:
Reputation Maintenance: VCs need to preserve their reputation. If they sign an NDA and later fund a similar idea, it might appear as though they've stolen the pitched idea. This conflict of interest is something they strive to avoid to maintain their integrity in the investment community.
Focus on Teams Over Ideas: VCs are primarily interested in the teams behind ideas rather than the ideas themselves. They recognize that the execution of an idea requires a committed and capable team, which is harder to find and more valuable than the idea alone.
Administrative Burden: The sheer volume of deals that VCs review makes managing NDAs impractical. An average VC sees about 20 deals per week, adding up to 1000 deals annually. Managing NDAs for each potential deal would be both time-consuming and costly.
Trust and Professional Relationships: Trust is a fundamental element of the investor-entrepreneur relationship. Requesting an NDA can signal distrust or a lack of understanding of how early-stage investments work, potentially souring the relationship.
These factors combined lead most VCs to operate without NDAs, focusing instead on open, trust-based relationships with entrepreneurs.