Hey our first post! Woo!
Looking into how to promote the sharing of ideas within BDQ, I decided that one of the best places to start looking was at accelerators given their penchant for reducing transaction costs and their similar interest in sharing + protecting. When I reached out to those on the small list of people both a) knowledgeable about accelerators and b) willing to reply, one gentleman and scholar impressed upon me one thing about NDA’s, they are currently useless to him (another pretty much said don’t worry about it). Digging into this idea a little bit, I didn’t come up with much first, but it is certainly the case that VC’s and other groups of business firms are utterly unwilling to engage in them. For VC’s, the apprehension is clear given the volume of similarly situated ideas that they are exposed to, but it was a slight surprise to me that a document which was conceived to protect the IP holder, is now shunned by the party it was supposed to aid. My contact summed it up simply as an issue of enforcement and cost. The usefulness of an NDA (or any contract for that matter) is limited to its enforceability. The more expensive enforcement becomes, the less likely a rational party is to allocate resources up front for it. For more on NDA’s check out this dense article written earlier this year in FC. I’ll continue to look into this and write a follow up, but it undoubtedly sounds like there is an increasing need to help startups protect their IP while allowing them to solicit feedback from accelerators, mentors, etc.