NDANon-Disclosure Agreements

NDA Non-Disclosure Agreements

Many entrepreneurs are anxious about divulging the main ideas of their businesses. These anxieties are understood in certain cases, particularly when the ideas are new technological inventions. Such entrepreneurs may ask investors to sign non-disclosure agreements (NDAs). However, most investors refuse to sign such agreements. The main reason for their refusal is that investors are exposed to many similar ideas which are presented to them by different entrepreneurs within the numerous deals they are offered. In this state of affairs, even if they are discreet but invest in only one of the similar projects, the entrepreneurs of the projects which were not chosen may sue them for the divulgence of information, and the investors will be forced to prove in court what actually happened, while incurring costs and jeopardizing their reputation.

In order to overcome the unwillingness of investors to sign NDAs, entrepreneurs can file provisional patent applications, thus surmounting the obstacle of disclosing information (even partially) to investors.