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NDAs and Large Companies

Q:How does a small start-up get a large company to sign an Non-Disclosure Agreement (NDA)?

  • NDAs are such a common facet of today's business community that most Fortune 500 companies won't balk. "If they do, says Alex Sharpe [asharpe@digex.net], ask them to point out the offending item, which you can then change. Or you can ask them for one of their NDAs and alter it as you see fit."

    For more information on NDA's in the funding process, see protecting your ideas. For example, John James [John@JRJames.com] points out that in a previous small start-up he negotiated non-disclosures with Intel and several other large businesses. "The engineering people we dealt with were used to signing NDAs and each company had their own version of an NDA, so it was usually not a problem to come to agreement."

    A common practice is to draft a mutual NDA that will provide joint/equal protection to both parties. This will probably alleviate some concern on the part of larger firms suspicious of a one-sided agreement. According to Jamey Harvey [jamey@digitaladdiction.com], if they have a mutual NDA, you can add anything you need that is not covered. It would be smart to have an attorney look at it first, but boiler plate documents are usually inoffensive.

    If you want to work with a large company, you may have to make modifications. In James" case, they had a Board member who was a senior partner in a large law firm. He would help them when they needed to make changes. You may need to find a firm with experience handling these situations. As it turned out, John James did modify the non-disclosure to comply with Intel"s preferences.

    Be wary that some Fortune 500 legal departments may take a while to review an NDA. So negotiation should always be an option unless your product launch date is looming. In that case, Jamey Harvey [jamey@digitaladdiction.com] points out that you don't want to get bogged down in legal details. "Nothing will kill deal momentum like asking someone to stop what she's doing and argue with her legal department to go outside their comfort zone for a deal they can't even really describe yet."


 

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