NDA for Co-Founders and Future Business Partners

When you need one

Sign it once the conversation moves past the general idea, and before either of you shares something you’d hate to see the other walk away with:

• A product plan, prototype, code or research you developed before you met
• Customer contacts, supplier relationships or a sales pipeline
• Financial models, pricing or a fundraising plan
• An invention you might patent. Talk to a patent attorney before you describe it in detail to anyone, NDA or not

Mutual, between the two of you

You’ll both be sharing, so a mutual NDA is the natural fit. Each of you takes on the same obligations for what the other shares, and neither of you has to share anything.

If you’re each signing as individuals, leave the company fields blank. If one of you already has a company that owns the idea, code or customer relationships, add it so the company is the party. And don’t skip it because your future co-founder is a friend. Agreeing on confidentiality while you get along is much easier than arguing about it after a falling-out.

What to write as the purpose

The purpose limits what each of you may do with the other’s information, so describe the plan:

• “evaluating and planning a potential new business venture together”
• “evaluating whether to start a company together to build scheduling software for dental clinics”
• “discussing a potential co-founder relationship for a home solar installation business”

What it doesn’t settle

An NDA covers confidentiality and nothing else. Once you decide to go ahead, you’ll need more:

• Ownership of the company: who holds what share, how it vests, and what happens if someone leaves. That belongs in a founders’ agreement and the company’s formation documents.
• Ownership of the work. Code, designs and inventions generally stay with whoever created them unless they’re assigned in writing. Founders usually assign them to the company when it’s formed; the NDA doesn’t.
• The right to compete. If you part ways, the NDA doesn’t stop either of you from pursuing a similar idea on your own, as long as you don’t use the other’s confidential information.
• The idea itself. An NDA protects confidential information, not a general concept; see NDA to protect an app or product idea.

If either of you still has a job

Read your current employment agreement before you start. Many include a confidentiality clause and an invention assignment clause, which can give your employer rights in work related to its business, or done on its time or with its equipment. Several states, including California, limit how far those clauses can reach, but the rules vary.

And don’t share your employer’s confidential information with your co-founder, NDA or not. An agreement between the two of you doesn’t change what you owe your employer. If there’s any doubt about what you can use, ask a lawyer before you build.

Sending it with FastNDA

Create the NDA as mutual, fill in the purpose, both names and emails, a confidentiality period and the governing state, then read it through and sign. You pay $29. Your future co-founder signs from a private email link with no account, and you both get the countersigned PDF with a certificate of completion.