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The Value of Non-Disclosure Agreements for Innovation

A Non-disclosure agreement (NDA) is a valuable tool, providing means to share confidential information with potential partners or investors that is highly sensitive. Highly sensitive information entails that those facts and figures that differentiate you from your competitors, or your commercial ‘edge’. These NDAs ensure that you can sleep easy at night, knowing that your exchange is protected against losing your edge in the market. The value of sleeping easy is underrated – try it out with an NDA!

If those involved in the sharing of said information misuse it, legal consequences protect you and your start-up. Within the NDA, a description of the consequences of a breach of contract is stated so that all parties are fully aware. NDAs are personalised based on the circumstances of your agreements, so it is important to establish your objectives with other parties involved so you can best tailor the rules and regulations according your needs.

Who is actually allowed access to the information? What particular information is necessary for the purpose of sharing, and what isn’t? How can you minimise potential leakage of information while maximising efficiency?

Before the contract is drafted, it is important for all parties involved to sit and outline what is considered confidential and sensitive information. Furthermore, you need to consider whether the agreement is mutual or unilateral. Mutual agreements result in both groups bound by agreement and both share confidential information. Unilateral agreements occur when only one group discloses sensitive information to another, such as a consultant or an investor. 

  1. It protects your information! Your information is valuable. It is what sets you apart from others and it’s important to make sure that you don’t lose your unique selling point. You’ll minimise losing information like this.
  2. The breaching party shall be liable for compensation in the case that damages occurred.
  3. It clearly distinguishes ownership of information between the parties. After all, it’s your intellectual property.
Some argue that NDAs prevent innovation and that they are not necessary at the very early stages of a project.  But we believe that is not the case! Better be safe than sorry.

You are working with parties that are aware of your work and pursuits.  Sharing your project ideas with friends might not provide the insight you are looking for. Outside the professional setting, individuals might not know what’s best for your business model or your product/service. Having the opportunity to innovate with specialists, gaining their expertise, will allow you to see things in a new perspective and innovate your product/service.

NDAs do not necessarily prevent the development of a project. Protecting business ideas is your first step in developing your project/service in a safe environment. Even if the professionals that you communicate business ideas to have no intention on developing or creating your project, having safeguards ensure protections in the worse case scenario. You are sharing sensitive information with professionals. If you aren’t comfortable sharing this information, an NDA provides an extra measure to keep your ideas safe.


Have an open discussion with those who you want to collaborate with, define how to separate your project and ideas, and enlist professional help to draft a document to protect yourself. You never know when the need may arise.

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