---
title: "What Is NDA?"
term: "NDA"
description: "An NDA — non-disclosure agreement — is a legal contract where parties agree not to share or use confidential information disclosed during discussions, diligence, or partnership talks."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/nda
---

# What Is NDA?

> An NDA — non-disclosure agreement — is a legal contract where parties agree not to share or use confidential information disclosed during discussions, diligence, or partnership talks.

**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](/glossary/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](/glossary/legal-diligence), [PIIA](/glossary/piia), data room access, and no-shop provisions.

## FAQ

### What is NDA in simple terms?

An NDA is a promise to keep shared secrets private — product plans, financials, customer lists — and to use them only for the stated purpose, like evaluating an investment. Breach can trigger damages or injunctive relief.

### Why does NDA matter?

For founders, NDAs protect sensitive data when pitching strategics or sharing deep diligence. For investors, most VC firms refuse founder-requested NDAs on initial pitches because reputational risk and deal flow volume make signing impractical.


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Source: https://venturecapitaltracker.com/glossary/nda