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Concept Stage:
Non-Disclosure Agreements:
Who can keep it a secret.
By
Gerald Youngblood and David Mackie
Managing Partners, seedstage.com |
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A non-disclosure
agreement, referred to as an NDA, is a document used to safeguard your concept, product
and/or processes. It is intended to contain the spread of this information and limit
it to those with whom it must be shared in the course of doing business. This includes
employees, consultants, partners and the press.
Why
It's Important
A good idea can be cloned
overnight and being first is 80% of the game for a startup. Also, sophisticated high
tech investors and venture capitalists will not sign NDAs, so you must decide clearly
what you're willing to say and when it will be appropriate to disclose this information.
How It
Works
You will need a lawyer
who specializes in intellectual property (IP) because how you manage your IP affects
your ability to protect your trade secrets. There are processes designed to accomplish
this. You also must make certain that your employees know who owns the rights to
your intellectual property. If you pay someone to do something for you, like a consultant,
your agreements should spell out that this is work for hire and the company owns
it. |
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| DO: |
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- Consult an IP lawyer.
- Your homework on
the investors you're targeting - check their references, find out if they're reputable.
- Remember that investors
and venture capitalists continue to exist only because they do keep data in confidence,
and the good ones will respect you for checking them out.
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| DON'T: |
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- Expect an investor
or venture capitalist to sign an NDA.
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