I have a genius idea. Should a VC sign a non-disclosure agreement before I share?

I have an idea for which I am contemplating pursuing venture capital, as it will accelerate business growth.

It’s an idea that is a first to market in Australia, and I would only share this with a VC after they signed a non-disclosure agreement. What is the general position on this in the VC industry?

The general position of VCs with respect to non-disclosure agreements is that they don’t sign them unless there are specific obligations that have been made to third parties that must be protected from disclosure – for example customer contracts etc. They certainly don’t sign them as a first step before receiving an introduction to the opportunity.

In any event, if all you have is an idea then you are wasting your time talking to a VC. VCs are interested in well constructed business plans and evidence of a team capable of executing that plan. Particularly in this environment, anything less will not be considered. You also need to consider intellectual property ownership. If you are importing an idea, this will also have less appeal.

Good luck developing up your idea; it’s a great time to be innovative. And once you have developed it to the point where there is good evidence of traction, then it may be time to take it to investors.

Doron Ben-Meir has been an active venture capital manager for the last eight years. He founded Prescient Venture Capital and prior to that was a consulting investment director of Momentum Funds Management. He was a serial entrepreneur over a 12 year period, co-founding five new technology based businesses.

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