I received this morning an email from a corporate finance guy looking for a 1.5m$ seed round (kinda high...). His email basically presented the business in 2-3 sentences, and then asked me to sign an NDA (draft attached).
I almost never sign NDAs now :
- my basic assumption is that by signing an NDA, I'm taking a legal liability with no counterpart for me. There's no reason for me to do so. Why would I want to be legally liable to someone I've never met, who will now be able to sue me if 1. I get involved in a business barely similar 2. talk about the biz casually ? It's a total no-no
- usually when signing contracts, an NDA is definitively not symmetrical : whatever liability I'm taking has to be compensated by the same liability by the other party; in addition, there's an asymmetry of size (hence impact) between 2 signing parties when you contract with a large account; a big penalty might kill you, whereas it's a rounding error on the other side. This has to be addressed.
- ideas don't really matter, only execution does.
- Most of us professional lawyers, accountants, consultants, investors are bound by a moral code and ethical standards. We have several professional lives and reputation is an asset we need to protect. Hence wrong doing is a bad business idea. No need for NDAs...
Bottom line : showing up at my door step with an NDA first (and maybe even after) is a no-no... and shows some amateurship...