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NDA or how to scare off investors!

Many entrepreneurs looking for funds start with a fixed idea in mind: have their fundraisers or investors sign a NDA (non-disclosure agreement) before sharing their documents (BP, Pitch Deck...)). Wrong idea? We give you our advice on the subject!

We might as well tell you the truth right away : very few investors agree to sign NDAs, no matter how good your project is. Here are some reasons you should not worry about it:

1 No one will steal your idea

You can have the best (or worst) idea in the world, that's not what matters. In practice, investors focus primarily on the team and its ability to execute the project, not on ideas. Anyone can have an excellent idea, but very few can turn it into entrepreneurial success.

Perhaps Mark Zuckerberg was inspired by the idea of the social network in a less than honest way, but above all he had the ambition and ability to transform this idea into an incredible success.

In practice, a brilliant idea can arouse the investor’s curiosity, serve as a bait to make him want to meet you and learn more about your project, but asking for an NDA to be signed does not send a good sign and may be counterproductive.

2 Maximize your chances

Some Business Angels receive over 50 deals per week. Signing a NDA means getting involved before they even get to know your project. This may force them not to meet other startups similar to yours. What's in it for an investor? For them, it is a waste of time and a major legal constraint.

Also, keep in mind that there are (especially in France) far more startups looking for funds than qualified investors. The process is therefore already selective enough not to add an additional barrier. Limiting yourself to investors who volunteer to sign an NDA gives you very little chance to raise funds quickly, and from big names who have only the embarrassment of choice.

3 Difficulty to execute a NDA

The power of a legal agreement you sign will depend on your ability to enforce it. For a NDA, it is a matter of being able to take legal action against someone who does not respect the confidentiality rules that apply to them. Will you be prepared to take the financial and moral risk of litigation? Probably not.

Above all, if an investor "shares" your deck and chooses not to tell you, it will be difficult to track it. Especially since his intentions are often laudable: to get feedbacks, to allow other investors in his circle to co-invest... Rather than focusing on the confidentiality of your documents, you are advised to define well in advance what information you agree to share.

One exception, however, is when an investor has a competitor in his portfolio. As a general rule, this will be a sufficient reason for them to decide not to meet you. So be careful to avoid the few unscrupulous investors who will use your BP or pitch deck to collect competitive information useful to one of the companies in their portfolio.

4 Stay focused on your objective!

During your fundraising, you must only be concerned about one thing: attracting and meeting as many qualified investors as possible in the shortest possible time.

Fundraising is, with a few exceptions, an important moment and meeting investors is a challenge in itself.

Your startup may be the next Facebook, but in any case, take advantage of your fundraising events to make yourself known! This is a great opportunity to network and meet investors, mentors and supporters.
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