To a startup, speed is essential to our survival. We are constantly racing the clock to achieve economies of scale before we must go back to capital markets for an additional fundraise. It is critically important that our sales cycles be as short as possible. Our customers appreciate this too since they can save thousands of dollars by using our products. While there are numerous things which can delay a transaction, the review and negotiation of a non-disclosure agreement seems to be an unnecessary one. Given that delay is disadvantageous to both parties, one must wonder why they spend time on NDAs.
NDAs are an essential requirement for many transactions to protect sensitive and confidential information and serve as somewhat of a trust exercise between two companies. Even if the confidential information is as simple as the number of units a potential customer intends to buy, if made public, the information could affect share prices of public companies. So, these entities want to be assured that if they share their secrets with a potential partner, investor or client, the other party will not exploit that information for their own personal gain. Thus, every NDA must be read and reviewed by legal professionals – and that takes time, a commodity few startups can spare.