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. 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.
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Author: Joseph W. Bartlett
