Let’s get this out upfront: asking investors to sign an NDA before you pitch your business plan is a rookie mistake. In more than 25 years of investing and running venture studio and accelerator programs, I’ve seen more than a few founders torpedo their own fundraising efforts before they left the dock—all because of misplaced secrecy.

Why Founders Think They Need an NDA

The logic seems sound—your business idea is precious, so you want to protect it from being stolen. Fair enough. But here’s the catch: in the world of early-stage investing, relationships start with trust, not suspicion. Investors are bombarded with hundreds of pitches a month. If you start the conversation with, “sign this first,” what you’re really saying is, “I don’t trust you yet.” Not a great way to kick off a partnership that’s supposed to last years.

Why Most Investors Refuse NDAs

Most professional investors flat-out refuse to sign NDAs at the pitch stage—and not because they want to steal your idea. There are two big reasons:

• Deal Flow: Investors see so many pitches. Signing an NDA for every one would create legal nightmares and slow their process to a crawl.
• Overlap: Many startups are working on similar problems. An NDA could prevent an investor from working with legitimate future portfolio companies with overlapping concepts.

The Most Important Reason Founders Should Never Ask First For an NDA

Asking for an NDA prior to even sending a teaser deck sends a blaring air raid signal to investors that your IP moat is so shallow that merely sharing it will put you at risk of someone easily stealing it. This is not an investible business, if this is really the case. Go focus on building a defensible IP moat and then start talking it up.

Your teaser deck or teaser pitch should reek of insurmountably high barriers to competition, not an open pasture for competitors to roll their tanks over.

My Own Personal War Story

I'll share this with humility, as I was only a third-time founder, not a 10x founder when this happened to me...

When raising money for a dot-com startup in 1999 I was contacted by a top-tier Silicon Valley VC that wanted to meet with me immediately, but they wanted to dive really deep into our secret sauce. They even proactively offered to sign my NDA. So I caught the first flight down to SF, opened my kimono all the way, and flew home that night thinking these guys were going to invest immediately. That's the impression they left me with.

A few days later and after getting ghosted by this VC, I read in the tech news that they led a $50M funding round in a stealth competitor. My heart sank as I realized they handed my business plan over to the CEO of that company. I called my attorney at Perkins Coie and said "let's sue those rotten bastards!" The sage advice I got back was "Ron, do you ever want to raise venture capital again? Because once you sue a VC over an NDA no other VC will likely ever deal with you." I'm not sure if it was an honor-amongst-thieves thing or just a concern that I'd be perceived as an idiot for even relying on an NDA in the first place, but the prospect of litigation costs also led to a dispositive decision to just take my lumps and do nothing about it.

Karma won that particular battle. In the end I got my 8-figure exit and that VC fund lost their entire investment in my competitor when the IPO window closed on them. But lesson learned. Develop trust first, one step at a time, and never, ever rely on an NDA as a substitute for that trust. Assume everyone is a potential spy for a competitor, and promise to reveal trade secrets only after the investment is banked.

When You Might Consider an NDA

That said, NDAs do belong in the equation—just not at the pitch stage. Here are the legitimate uses:

• Trade Secrets: Not all IP is patentable, and even if it was, patenting your inventions will eventually expose them for all to see once granted and published, so some things are best treated as "trade secret" information. If your secret sauce is a unique invention or formula (think proprietary hardware, production processes, or algorithms), you can discuss generalities in early meetings, but leave the gory details for due diligence—and ask for an NDA at that point.
• Patentable Secrets: If you do intend to file patents and you need to disclose certain things to investors that you have not yet filed in a patent application, then to preserve the art you will absolutely need to get an NDA signed in advance and follow proper documentation procedures whenever you share any of it with anyone (your patent attorney can guide you on this).
• Strategic Partnerships: If you’re negotiating beyond funding, such as a joint venture or partnership, and there’s deep mutual due diligence, NDAs are the norm.
• Employee & Contractor Relationships: Always use NDAs (and IP assignment agreements) with employees, advisors, and vendors who get under the hood.

When to Never Use an NDA

Skip the NDA entirely for the first—and even the second—conversation with a new investor. Your goal is to entice interest, not shield every rivet of your business model. Focus your initial pitch on the problem, solution, traction, and vision. Save the top-secret algorithms for much later.

The Bottom Line

The most successful fundraising stories stem from trust, transparency, and efficiency—not paranoia. In the early phase, your best asset isn’t secrecy, it’s storytelling and execution. Save legal paperwork for when there’s real money on the table.

So before you send that next “attached please find our NDA” email, ask yourself: Are you protecting your business or smothering your own momentum?