3 NDA Traps That Can Ruin Your Startup

Startups sign NDAs like they are autographs. But these "standard" forms often contain poison pills that can destroy your future fundraising or exit.

1. The "Residuals" Clause (The Memory Thief)

The Trap: A clause stating that the receiving party is free to use any "ideas, concepts, or know-how" retained in the unaided memory of their employees.

Why it Hurts: You pitch a VC your revolutionary algorithm. They don't invest. Six months later, their portfolio company launches the same feature. They claim their engineer "just remembered" the concept. The Residuals clause makes this legal.

2. One-Way vs. Mutual

The Trap: The NDA only protects the "Disclosing Party" (them) and puts obligations on the "Receiving Party" (you).

Why it Hurts: In a partnership discussion, information flows both ways. If you share your roadmap in a one-way NDA, they can steal it, but you can't even tell anyone you met with them. Always demand a "Mutual NDA".

3. The "Non-Solicit" Trojan Horse

The Trap: Buried in paragraph 8 of a "Confidentiality Agreement" is a sentence saying you agree not to hire any of their employees for 2 years.

Why it Hurts: You just wanted to show them a demo. Now, if you meet a brilliant engineer at that company who wants to join your startup, you legally can't hire them. You've unknowingly signed a hiring freeze.