What is a Non-Disclosure Agreement and What Are They Used For?

Non-Disclosure Agreements, or NDA for short, are documents that companies use to protect their confidential information. So if my company has some proprietary or confidential info and I want to share it with you, maybe we are thinking of starting a venture together, I may ask you to sign an NDA.

In that agreement you say you will only use the information for the purpose we agreed to. In this case, looking into going into a venture together. You will not use the information for your own commercial advantage and you will not share the information with others.

Sometimes, they’re limited by time. Sometimes, there are other provisions in them, like a non-circumvent which says “you won’t go around me and try to do business with my customer.” That’s provision is in a brokerage context.

The main crux of an NDA is what I told you about. I’m giving you some confidential info so don’t use it for your own advantage. Many startups want to protect their idea with an NDA before pitching to an investor. Check out my video on whether or not you should ask a venture capitalist to sign a non-disclosure agreement.