Singapore startups should forget about NDAs

Summary:The Singapore startup's favorite tactic when talking to venture capitalists is to ask for a non-disclosure agreement (NDA). This is a huge turnoff for VCs that get thousands of business plans a year.

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Given the news yesterday that Singapore startup, Viki, has been sold for US$200 million, I'm sure other local entrepreneurs are harboring such dreams of grandeur. However, that journey to US$200 million begins with a few small steps where one of the first depends on securing enough VC cash to move up the next rung. 

I attended a meeting last week where one of the VCs in the room remarked that only in Singapore had he encountered startups that would present him with a non-disclosure agreement (NDA) before pitching their ideas to him. He rightly pointed out that very few startups had entirely unique ideas and any VC worth its salt would not sign a NDA for a startup among the thousands of business plans he would see in a year.

I know some lawyers would no doubt recommend using a NDA. In my younger days, I might even have insisted on it. Today, though, I would opt for a more considered approach of choosing what to reveal: afterall, it would be foolish to go all the way on the first date. Provide just enough to whet the appetite.

Furthermore, if you think about it, a VC with a reputation of stealing ideas would run dry of business plans as word gets around. A startup that has done its homework should keep away from such infamous VCs.

So, the rules of the dating game can apply to fund-raising. Stay safe.

Topics: Start-Ups, Legal, Singapore

About

Bryan is Pinsent Masons's technology media and telecommunications partner in Singapore and has practised since 1997. He advises on contracting and risk management in the areas of information systems and telecommunications, including intellectual property, data data privacy, e-commerce, cloud computing, and sourcing. Bryan also has adv... Full Bio

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