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Raising Money the Right Way

While most people ask themselves “What should I do?” when seeking VC financing, there are also some things that a person should not do. Doing any of the following at best makes you look like a rookie (which is okay, we were all rookies once, but you don't want to look like one) and at worst kills any chance that you have of getting funded by the VC you just contacted. We encourage you to avoid doing the following when you are raising money from VCs.

Don't Ask for a Nondisclosure Agreement

Don't ask a VC for a nondisclosure agreement (NDA). Although most VCs will respect how unique your idea, innovation, or company is to you, it's likely that they've seen similar things due to the sheer number of business plans that they get. If they sign an NDA regarding any company, they'd likely run afoul of it if they ended up funding a company that you consider a competitor. An NDA will also prevent a VC from talking to other VCs about your company, even ones who might be good co-investors for your financing.

On the other hand, don't be too scared about approaching a reputable VC with your idea without an NDA. The VC industry is small and wouldn't last long if VCs spoke out of turn sharing people's knowledge with one another. And don't think that VCs will steal your idea and start a company, as reputational constraints as well as limits on a VC's time will eliminate ...

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