Should I ask investors to sign an NDA before sharing my PPM?

May 26, 2021

by a searcher from Columbia University - Columbia Business School in Cairo, Cairo Governorate, Egypt

is it common to ask potential investors to sign NDA before sharing your PPM to protect the proprietary information in it? and if yes, can you make the NDA on your personal identity or do you have to make it on a registered entity? I know this depends on each jurisdiction but I am looking for similar experiences in Europe?

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Reply by a professional
from William Mitchell College of Law in Minneapolis, MN, USA

Thanks ^redacted‌. I am a lawyer that practices in this space and also in securities law where people use PPM's and other offering materials to raise money (this isn't legal advice however). ^redacted‌'s approach is correct. While you may worry people could steal your deal or ideas, most investors see multiple deals from multiple searchers and will not risk signing an NDA at an early stage. Use a short teaser, not only do you avoid the NDA issue it is also generally more effective to generate interest with someone who is looking at multiple opportunities. Maybe there is a different custom in Europe and/or different laws. Good luck.

Reply by a searcher
from Westminster College of Salt Lake City in Salt Lake City, UT, USA

Generally speaking, not if you want to raise capital... But it depends on the audience and millions of other elements. Here's one perspective, as it relates to private investors with discretion to deploy capital broadly. First, I don't know of any of these investors who will sign an NDA these days because they get 20, 30+ deals a day. Are they going to read and sign###-###-#### legally binding agreements per day or have their legal team do it for them? No, it's not even fundamentally possible plus it signals to them that you don't understand them or what they do.

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