Entrepreneurs are often concerned about the confidentiality of their information. 

During the initial engagement with the investor, it’s not common to sign NDAs (non-disclosure agreements) as the investor is still figuring out the basics of your business.

At the introductory stage, keep the discussion on the general level.

As you go further with the discussion and then into due diligence, the investor will ask for deeper information that you may consider confidential.

Confidential information includes customer names, intellectual property such as trade secrets, and more.

If you have highly sensitive information, then you can have the investor sign an NDA before reviewing the diligence. 

Another approach is to develop two diligence boxes. The first is non-confidential and contains basic financials, entity filings, patent filings, customer company names, and other information that is not sensitive.

The second diligence box contains detailed information such as specific customer contact details, trade secrets, etc. For this, the investor signs an NDA which can be used to control how it is handled.

For many investors, the first box will be sufficient and alleviates the NDA process.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.