Ask VC if they are willing to sign an NDA and you will probably get the answer provided byMarc Andreessen from Andressen-Horovitz at Quora: We almost never sign NDAs. The only exception is for certain late-stage growth rounds with companies that are very far along. This is the same position you will find most other venture capital firms take. Basically asking VC to sign an NDA on one of the first meeting is like asking a girl on a first date to sing a prenup. Good luck with that.
When you meet the investors, you should always remember that they are looking for ventures to invest in. The ones that will help them earn more, not less. Entrepreneurs are too often all about technology and a lot less about making a relationship work. The challenge is that they get so caught up in describing their technology that they forget that ultimately the investors are people. And sure they care about technology because that is how they are going to make money. But apart from being interested in technology they want to know precisely how you are going to make money. And that is when you need to talk traction but not the valuation. You do not need to talk valuation during your pitch. You do not even need to talk valuation during the first meetings with investors. Just get the investors sold on by talking how you are going to make them a lot of money.
And one more thing do not wave NDA in their face. Just Don’t! Why? First of all because, the idea — it’s no big deal. If it’s any good, someone has had it before and someone will have it again. If you’re still convinced it’s that good, go file a patent first, and then go talk about it. Keep in mind that investors outside of big tech (cleantech, biotech…) automatically have a bias against “patented” ideas, and most brilliance seems obvious in hindsight. Ask an investor to sign an NDA, and you’ve just filtered out all but the most desperate investors. I have once listened to a startup who pitched at a startup competition who asked the audience not to record, not to take pictures and not to note. As if they were saying… leave the room or “sign the NDA”. Their idea was interesting but there were at least dozen of similar ideas on the market already. They have actually made a laughing stock of themselves. Needles to say they did not win the hearts and minds of the investors.
One more peculiar thing happened when Paula Pul from Lawmore organised a speed date with VC for polish startups. The willing and able were supposed to register online to benefit from this nicely organised event. It was for their own good to meet with the VC and present their ideas and ventures. One startup however (I will save them and not mention them) decided to write prior registration that they will register but the organisers need to sign an NDA first (sic!). Needless to say no one signed the NDA. When I once talked about this in my other post on InnPoland one of the guys made a comment that VC could simply sign the NDA for the sake of it. As, in his opinion, it would make things easier. Well, it wouldn’t. We live in different realities. VC meet hundreds, if not thousands of startups. 90% of those startups present the ideas that are not genuinely new. They offer slightly different solutions to the same problem. If the VC signed NDAs with all of them, they would clearly be not able to talk about anything in a blink of an eye. If you are a startup looking for funds you gotta play the game. And that game does not include waving NDAs everywhere you go. Trust me. And trust VCs I work with. Plus make trust one of your values, like Sam Altman who says: I operate in business assuming people won’t screw me. occasionally I get really screwed. It’s still worth it.