In this interview with Jeremy Glaser, who is a partner at the law firm Mintz Levin and also serves as Co-Chair of the firm’s Venture Capital & Emerging Companies Practice, we discuss why VCs won’t sign NDAs, sharing information with investors without a NDA. You need to “leak out” the information while you gage if the interest is real and genuine, and while you build trust.
As Jeremy says, “Venture capitalists and most Angel investors will not sign NDAs. The reason is obvious. They see so many deals that, if they sign NDAs on deals, they don’t know if the next deal that they’re going to see might be of interest to them. If they invest in it and they’ve signed an NDA with you but they decided not to invest in your deal, now you’re suing them, claiming that they violated it. They can’t be put in that position. It’s just not going to happen. You will not get an NDA signed in that situation. It’s built upon a lot of trust. It’s the same advice that I give to companies when they’re considering a transaction with a third party or an M&A deal. You need to leak out the information. You don’t just walk into the meeting and give them everything. You need to make sure that there is real interest, that it’s serious interest. Over time, and as you get comfortable with the relationship, you can share more and more of the information that you view as important and crucial to your business.”
For more strategic insights on startups, visit questfusion.com.
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.