Singapore startups should forget about NDAs

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

Bryan Tan

About Bryan Tan

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. He also has advised 10 different governments on e-commerce law.

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3 comments
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  • The insanity

    What you seem to be suggesting is that Singapore start ups have very little to offer and nothing of any real value worth stealing.

    The issue should really be one of how innovative the idea is and how easy it would be for someone to copy it. Some of the best, as in most profitable, ideas are the least technical and therefore the easiest to steal.
    Pastabake
  • Protecting Startups

    I think its a very novel approach by Singaporean startups. Ideas by nature need to be protected. VC and angels have often rejected ideas and innovations which often has grown into the next big thing. The sheer fact that many investors have vested interest in companies they have investments in, they can easily drop and idea or two they have seen startups present.

    I think it would also show seriousness on the investor who is willing to respect the innovations and creative effort by any startup. Just because an VC/investor is not interested does not make the idea have less value.

    Recently I read about an Australian startup who was rejected by every investor in Australia only to raise over 500K overseas.

    Bottom line, any idea has value, its about time the investment community were less cavalier about it.
    Azizi Khan
  • Who Needs VCs, Anyway?

    Make them beg to give their money to you.
    ldo17