NDAs for startups: when you need one and what to check

When an NDA makes sense

An NDA is useful whenever you're about to share information that has real value and isn't public. Common examples include:

• Exploring a partnership, integration or joint venture
• Sharing technical detail with a development agency or freelancer
• Due diligence for an acquisition or major commercial deal
• Discussing pricing, product roadmaps or customer data with a potential supplier

When you probably don't need one

Many early-stage investors won't sign NDAs for an initial pitch, and asking can create friction. Share what's needed to explain the opportunity and keep the genuinely sensitive detail for later, under an NDA if appropriate.

Also remember that an NDA is only as good as your ability to enforce it. It doesn't replace basic measures such as limiting who sees what and marking documents as confidential.

Mutual or one-way?

A one-way NDA protects only the disclosing party. A mutual NDA protects both. If information will flow in both directions, use a mutual NDA. If you're receiving someone else's one-way NDA, check you aren't sharing your own sensitive information without protection.

The definition of confidential information

This is the core of the NDA. Too narrow, and it may not cover what you actually share, for example if it only protects information marked "confidential" in writing. Too broad, and you may be bound to treat almost everything you hear as confidential, which can be hard to comply with.

Check the standard exceptions are there: information that's already public, already known to the recipient, independently developed, or received lawfully from a third party.

Other clauses to check

• Purpose: use of the information should be limited to a defined purpose
• Duration: how long the confidentiality obligations last. Two to five years is common, with longer or indefinite protection for trade secrets
• Permitted disclosure: can you share with employees, advisers and investors who need to know?
• Return or destruction: what happens to information when discussions end
• Non-solicitation or non-compete clauses: these sometimes appear in NDAs and can significantly restrict your business
• Governing law and jurisdiction: ideally England and Wales for a UK business

Watch for terms that don't belong

Some NDAs include clauses that go well beyond confidentiality, such as an assignment of intellectual property in anything developed during discussions, indemnities, or exclusivity. These are worth questioning. An NDA should protect information, not transfer rights or tie your hands commercially.

Have your own template

A short, balanced NDA template of your own saves time and puts you in control. Sending your template first usually means negotiating on your terms rather than the other side's.