Should you be using NDA agreements as a real estate investor or business owner?
Are Non-Disclosure Agreements (NDAs) an essential step in business? Or are they a dangerous pitfall which will do your venture more harm than good?
NDAs 101:
A non-disclosure agreement is designed to prevent those you share things about your business with from sharing them with others or stealing your ideas and replicating them.
These are similar to non-compete agreements as well.
Some companies have business partners, new hires, and others sign these agreements before an engagement.
It is a pretty standard legal form you can find online and fill in the blanks.
The Dangers Of Using NDAs
Very rarely are NDAs and non-compete agreements useful to small businesses. Even in the case of a breach, you may have a very hard time proving it, and collecting. That costs a lot of time and money in the courts. Often with little to gain.
This can be different for large corporations. Those with billions of dollars in revenue and giant multi-million dollar legal teams. You can imagine the impact of someone stealing the prototype of the next Apple product and taking it to the competition to replicate in advance of their launch.
An example of this is new banking and card startup Stash. They didn’t even buy their own website domain name until they had raised almost $300M in capital, and five years and five million customers down the road.
The first danger is that they just slow you down. The last thing you probably need is more paperwork and forms and dealing with more attorneys and negotiations at each step in your business. Focus and speed is an asset and advantage. Don’t throw that away.
The second danger is that it can do more harm than good when it comes to trying to raise money and hire great talent for doing more deals and growing your business. The best advisors, freelancers and investors are crazy busy. They have their pick of thousands of people to help. No matter how unique you think your business is, the truth is that they’ve already seen the same thing 100 times, this week alone. There is a huge demand for their help. If you put up barriers like this, they’ll probably just fund or invest their time in helping someone else.
Thirdly, as a younger company or investor, what you need most is awareness and recognition. The more people that talk about your business and concept, the better it is for you. The more secret you try to keep it, the longer and harder it will be to get customers and grow.
You should almost hope people will validate and steal your idea and spread them around. If anything this will only make you do ever better. Besides, most people won’t take action on it. That's where you stand out. Plus, there is nothing really secret today. It’s either publicly online already or easily hackable in less than 2 seconds by anyone who really wants to know.
Cling to your advantages, speed, focus, innovation and taking action. Don’t worry about what others are doing.
We’re here to help you fund your next wholesale deal, and provide the proof of funds letters and verifications of deposit you need to go fast.
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