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Why founders should never start a pitch by asking for an NDA

I get several hundred requests for start-up investments every year. Often just an email with a few KPIs, sometimes a one-pager, but often also complete pitch decks.

From time to time, perhaps every 20th time on average, I get only a very vague description, or none at all, combined with the request to sign an NDA ("Non Disclosure Agreement") first.

When I was new to the investment business a few years ago, I complied with that request.

About ten times, that's how long it took me to figure out a simple correlation: founders who ask for NDAs have the worst start-ups. Every single startup I saw after signing their NDA disappointed me.

After receiving such an email again today, I asked myself, why is this the case? Why this negative correlation? And now, after many years in the start-up investment business, I think I have a plausible answer to it:

  • Strong founders believe in themselves, and know, that an idea is nothing, but execution is everything. And they know that at any given time, several teams worldwide, if not dozens, work on each and every good idea at the same time anyway.
  • They know that business angels and VCs see thousands of ideas, but don't ever have time to copy them. And Angels and VCs are looking for teams, not for ideas.
  • They also know that every good investor has a reputation to lose and would never share or publish data.
  • They also didn't send their pitch decks to hundreds of potential investors by way of mass mailing (and if they did, well, tough luck!). Instead, they were selective and had researched in advance which investors were a fit. And then they contacted those through trusted introductions.

So in a nutshell: Please, please, dear founders, spare me, and also other business angels and VCs an NDA right at the first or second inquiry. Sure, feel free to give out information piece-by-piece. And of course, once a due diligence starts, an NDA is completely okay. But only then, please. Thank you!