Model NDA that a Reluctant VC Fund May Sign (Before the Term Sheet is Finalized)

It is well known that venture funds are extremely reluctant to sign non-disclosure agreements ("NDAs") prior to the negotiation and execution of a term sheet with a company the fund is considering as a potential investment opportunity. In fact, it is often viewed as unsophisticated to even ask for a NDA until such a time that the potential investor is performing more detailed diligence.

Various techniques have been developed to minimize this problem, including a hold back by the company of particular sensitive information and/or the deposit of trade secrets with, for example, an independent consultant who will sign an NDA and report to the fund as part of the due diligence process.

Some professionals have worked at developing a model NDA which is non-threatening to the fund, in the sense that it can minimize the danger the disclosing company will, if disappointed, make a nuisance claim that its information has been misused by some other company in the fund’s portfolio. To see an example of this NDA that a VC firm might consider before a term sheet is signed, we rely on Joe Bartlett, Of Counsel to Fish and Richardson, PC and Senior Editor at VC Experts.

Read more in this week’s buzz, Model NDA that a Reluctant VC Fund May Sign (Before the Term Sheet is Finalized) http://vcexperts.com/vce/news/buzz/archive_view.asp?id=389