Approximately once a week we’ll be asked something along the lines of: “Could I also ask if you would be willing to signed an NDA with [my company].”
And our answer is always “You can ask, but no.” Angel groups do not sign NDAs.
There are many good reasons – Tony Lettich outlined some of the reasons here; Wil Schroter added some others here – but the short reason is “because life’s too short.”
Why does this matter? No harm done in asking, is there? From the entrepreneur’s perspective: we asked, the investor said no, and we’re back to where we’re started.
Well, from our perspective: not quite. The fact of asking us to sign an NDA tells us a few things about this investment opportunity even before we’ve met you – and none of them good.
· It tells us that you haven’t done your homework. You haven’t reviewed our process page; you haven’t entered “Angel group NDA” into a search engine; you haven’t done the basic research on a key partner on your entrepreneurial journey.
· Or perhaps you have – but think it doesn’t apply to you. This tells us you over-estimate the value of your idea or yourself, and in neither instance does that make us want to work with you.
· It tell us you are not well versed in how to be a startup. If you’re a young first-time entrepreneur, how many more serious “rookie mistakes” are you going to make? Or perhaps you’re too used to the cushy mid-cap middle management world of NDAs, corporate general counsel, and established protocols to thrive in the entrepreneurial world of a startup?
That’s probably too much to read in an innocent question. But when we are evaluating startup companies, we don’t have much information to go on, so every data point you give us becomes crucial. If your first data point tells us you are going to be harder to work with than the next entrepreneur in our pipeline, we probably aren’t going to look for more data.