Venture Capital/Opinion/ Founders, drop the NDAs — no one cares about your idea Stop with stealth and NDAs and consider reality. Elena Mazhuha Elena Mazhuha \Venture Capital Speedinvest starts €3m fund of funds programme to back emerging managers By Eleanor Warnock 17 February 2023 Venture Capital/Opinion/ Founders, drop the NDAs — no one cares about your idea Stop with stealth and NDAs and consider reality. By Elena Mazhuha Monday 14 February 2022 By Elena Mazhuha Monday 14 February 2022 In my four years in venture capital, I’ve been asked by a few founders to sign a non-disclosure agreement (NDA) before they’ll give any numbers about their company. It’s easy to spot founders who are likely to want an NDA. What their deck lacks in numbers and traction, it makes up for unambitious market forecasts. They want to be in stealth mode for ever. In other words, everything is VERY TOP SECRET. News flash, founders: your “secrets” aren’t really secrets. Because no one is going to ever steal your idea — especially not VCs. By going around making everyone sign NDAs, you just look dumb. So why wouldn’t anyone copy another person’s idea? Here’s five reasons to stop worrying. 1/ This idea is not the key business for the people you pitch If a founder pitches to an investor, they won’t just leave their VC firm and start copying the founder’s startup. VCs spend years building up their reputation, trust and media presence to raise a fund and have a decent pipeline. Quitting the job to steal one’s idea is not an option. If a founder pitches to a corporation investing in startups, in most cases this corporation doesn’t have any spare employees to copy a random product, because everyone is busy solving current problems and making shareholders happy. If you don’t believe me, just check out this corporation’s “We Are Hiring” page and see how many people this company needs right now to deal with routine issues. 2/ It takes time to build a product Each startup founder spends months doing the research, building the minimum viable product, crying for two days in a row because it doesn’t work, fixing bugs, doing customer development, finding the first clients and actually starting to earn money. Even if a founder has endless financial resources, they still need time to hire motivated people, mentor them and have them build a decent product that fits the market’s needs. Potential copycats will need to spend the same time, financial resources and motivation to do the same. And before they do, the original founder will probably be raising their Series A! 3/ This idea will probably be worth nothing to a large corporation In 2020, Alphabet earned $180bn, Meta made $86bn and Netflix made $25bn. Even if you’re building a business which will earn $100m in seven years, that kind of revenue will add less than 1% to a corporation’s financial results. And the big tech companies would probably try to buy your startup in seven years instead of spending that time and masses of cash to build something similar. 4/ All ideas are untested hypotheses All ideas are untested hypotheses, which need years of validation, thousands of iterations and might not work eventually. Who wants to invest millions and years in unvalidated ideas? Definitely not large corporations, which already have billions in revenue, shareholders to please, privacy issues to solve and other routine things to do. In fact, there’s a whole independent industry of people investing in unvalidated ideas. It’s called venture capital! 5/ Motivation means a lot If someone decided to launch a business, left their jobs, hired a small team using their savings and spent months to convince their families not to leave them for good, they already have more motivation to turn an idea into a huge success than a person/company, which only wants to make money by copying one’s product. People driven solely by the wish to make money give up when they face problems. Why bother if today they could make a picture of a funny ape and sell it for half a million to Paris Hilton and Jimmy Fallon? By contrast, people with a deep personal motivation can be stopped only if they already tried everything and nothing worked at all. In most cases, they never stop, because they can pivot, raise a bit more money, convince first employees to work for free for a while and finish what they’ve started. Sharing ideas with investors, potential acquirers from large corporations or other founders is a good way to collect feedback, brainstorm together, have someone unbiased listen to the hypothesis and suggest even more unique solutions to the problem. Not sharing is a good way to get stuck really soon and have no fresh hypotheses to move on with. Elena Mazhuha is investment director at Flyer One Ventures. Related Articles Back Market raises €276m to build a circular economy giant By Chris O’Brien Click here to read more France’s Sista announces first close of €100m VC fund By Amy Lewin Click here to read more 9 Polish startups to watch, according to VCs By Zosia Wanat Click here to read more The danger of venture capital ‘foie gras’ By Check Warner and Tom Wilson Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? 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