How to Avoid Common Startup Legal Missteps

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It can be a dangerous world out there if you aren't careful, particularly if you're an entrepreneur and going it alone as a one-person operation. Free Enterprise, Findlaw's small business blog has a rundown of the most common five legal mistakes startups make. Rather than rehash their post, I wanted to zero in on that post's final tip: Don't ask a venture capitalist to sign an NDA.

Venturebeat  did a post on the sort of mistakes to avoid with VCs, and that's on there, too: 

VC’s are inundated with business plans and executive summaries and are constantly talking to entrepreneurs whose ideas may be similar to yours.  There is no way a VC is going to risk getting sued as a result of funding a startup with a similar idea or business plan to yours.   Moreover, they would need to hire a lawyer to review and negotiate NDA’s – which from their perspective is a waste of time and money.  To the extent you have any “secret sauce” or proprietary technology that you’re concerned about disclosing, you should just not share it with the VC. 

If you ask a VC to sign your NDA, you're going to look like a rookie. So be a pro and sell the sizzle, not the steak, as the old adage goes. And if you're hurting for ideas on how to pitch VCs, check out this TED talk and this Wall Street Journal piece on that topic.

And of course, be sure to read Findlaw's full list referenced above.

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.

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