NDA is not the primary startup's concern - Photo source: http://www.flickr.com/photos/it290Working with many early stage start-ups, we are often asked to sign NDA documents. NDAs have become as “fashionable” as using such buzzwords as “lean”, “MVP” and “agile” in small talks between entrepreneurs discussing their product development processes.

Sometimes it seems that people want to introduce innovative products to the market primarily to feel the thrill of that “start-up” euphoria rather than for the sake of profit.

For some reason, 90% of would-be entrepreneurs seem to have forgotten that generating profit is the main aim of any business. Communicating with lots of first-time entrepreneurs, we understood that around 80% of them have not any clear idea about the further steps in their business development. All too often they regard investors not only as the source of funds but also as project development and promotion mentors.

In many cases even before the starting product development negotiations entrepreneurs express their concern with the risks of losing their “brilliant” ideas. At the same time these entrepreneurs do not find the time to explore similar solutions, analyze competitors, identify their weaknesses, and focus on the solution of a specific problem. Many entrepreneurs do not seem to fully understand the monetization mechanisms as well as they are reluctant to write a more or less detailed description of the product. We meet such people all the time.

Every time we sign another NDA we half expect to receive some scarce information similar to one introduced to us by others many times before. At the same time the critical evaluation of the idea is often perceived by young entrepreneurs as our unwillingness to cooperate.

We are lucky to have the opportunity to work with successful companies that have gone through all the stages of start-up project development from a prototype through investor pitch presentations to the final investment round. We are also lucky to be involved in creating products that do not require additional investments. And yes, we signed NDAs with such companies before we started our cooperation.

Our experience has taught us one rule – If your idea is so unique that you can hardly find a competitor, you just need to patent it. If not, make sure to complete the initial project analysis, and only then think about the NDA and other formalities.

What to consider at the initial stage of a start-up project:

  1. Idea description in a single tweet;
  2. Determining the business model (B2B, B2C);
  3. Deciding on the targeted group to address first;
  4. Finding the competition on the local and global markets;
  5. Determining ways of monetization – ways of entering the market with personal funds or without too big outside investments;
  6. Outlining the bare minimum of functionality to enter the market with;
  7. Communicating with potential users of your future product to get the idea about their needs;
  8. Defining sales channels;
  9. Finding potential partners;
  10. Estimating the budget.

And only then you should download and prepare the NDA document.