NDA (non-disclosure agreement) is a contract that restricts how recipients may use or disclose confidential information shared in business discussions.

How it works

Common forms include one-way NDAs (only the recipient is bound) and mutual NDAs (both sides protect each other’s information). Key clauses cover definition of confidential information, permitted disclosures (lawyers, accountants), term length, and carve-outs for information that becomes public or was already known.

In venture fundraising, standard practice is: investors rarely sign NDAs for first meetings; deeper diligence with strategics, customers, or acquirers often triggers mutual NDAs. M&A processes use NDAs before data room access. Employment contexts overlap with PIIA and invention assignment agreements.

NDAs do not replace careful sharing. Mark documents confidential, stage access, and use clean teams when discussing competitive acquisitions. Most venture firms will still pass on a process that demands blanket secrecy before a first meeting.

Why it matters

• Founders: Do not refuse all investor meetings without NDAs — you may lose access. Do use NDAs when sharing cap table details, unreleased product roadmaps, or proprietary data with parties who are not bound by fiduciary or reputational norms.
• Investors: Signing NDAs creates legal exposure and can block co-investment conversations. Firms rely on professionalism and competitive dynamics rather than blanket secrecy on early pitches.

Common mistake

Assuming an NDA stops all leaks. Enforcement is costly; the practical protection is limiting what you share until trust and process maturity justify deeper disclosure.

Related ideas

See also legal diligence, PIIA, data room access, and no-shop provisions.