Non Disclosure Agreement – Why is it Important for startups?

Non Disclosure Agreement: Quick Read

Often, as entrepreneurs, we discuss our ideas with friends, families, investors or any other party to validate, check feasibility, scope, future, demand, etc of the ideas. We are so full of enthusiasm and high on motivation that we just keep talking and giving away our entire thought process around our startup to others. We try to convince them to believe our ideas and that it will work. Certainly, no harm in doing so, until you find that your idea has now become someone else’s idea and instead of partnering with you, they are set to bring up the startup on their own.

We recommend that every entrepreneur should keep in mind to safeguard their idea and get into a Non-Disclosure Agreement with other people they are discussing their startup. Non-Disclosure Agreement gives right to the owner to safeguard the confidentiality of their startup or business. It means that other parties have agreed to enter into a contract of not disclosing the information to anyone under the agreement. It may further limit other parties from entering into the same business for certain period, except with you.

Non-disclosure Agreement also known as Confidentiality Agreement (CA) is not just for startups or safeguard ideas, but they are also very important for ongoing businesses for their strategy, trade secrets, IP,  etc. NDA can be between 2 or multiple individuals or between company (any legal entity) and individuals or other parties, between company and its employees or service providers, etc.

Types of NDA:

It is mainly categorized into 3 different types –

  1. Unilateral – This is a one-way NDA where one party is providing information to the other and expects other party to maintain the confidentiality
  2. Bilateral – This is a two-way NDA where both parties disclose information to each other and expect both parties to maintain the confidentiality
  3. Multilateral – This is where more than two parties are involved and exchange information which needs to be safeguarded for being disclosed further


Key content of a Non-Disclosure Agreement:

  1. Details of the parties involved in the agreement
  2. Period of agreement
  3. Details of what is safeguarded
  4. Termination of contract
  5. Penalties in case of a non-adherence of the agreement


If you need any professional help to get a Non-Disclosure Agreement for your startup/business, you can contact us by clicking here

If you are confident of your startup and want to get into a Non-Disclosure Agreement, we further recommend that you register your legal entity – Proprietor, Private Limited, LLP or a partnership firm. Click here to get your company registered at very affordable fee.




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