Why is my lawyer telling me *not* to send an NDA?

Plus: changes coming to the UK tech sector.

August 05, 2024


Hey there,

Welcome back to our monthly newsletter focused on helping your business grow faster and smarter. We’re:

  1. 🙋‍♀️ Answering the one legal question we’ve been asked most this past month by founders and startups. 

  2. 📰 Summarizing a noteworthy piece of news (and why it’s relevant to you). 

  3. ✅ Giving you one legal reminder to check off your list. 

  4. 🚀 Sharing several events this month that could bring value to you and your business.

  5. 💸 Linking a few funding opportunities we love.

Got a question you’d like us to answer next month? Just reply to this email and let us know.

1. Our Most Asked Question during July:
Should I send an NDA to my investors? 📃

At its simplest, an NDA is an agreement between two or more parties outlining what is and what is not confidential information. If a party reveals any confidential information or uses the information for a prohibited purpose, that party is subject to legal liability. As lawyers, we’re big fans of NDAs. 🙌

Now whether it’s their IP or their business plan, a lot of startups have confidential information that they want to keep secret from competitors. 

So it makes sense to have prospective investors sign an NDA before sharing too much about your business, right? 

Weirdly, no.

Professional investors nearly always refuse to sign NDAs. As a result, founders who request signed NDAs may come across as inexperienced and naïve to potential investors - and that’s the last thing we want for your business.

This may feel unfair, but there are three reasons why potential investors won’t sign NDAs:

  1. ⚖️Legal: Professional investors are often reviewing hundreds or thousands of potential investment opportunities. Signing an NDA places untenable restraints on them as they evaluate businesses that are potentially competitive with one another or with existing companies in their portfolio. 

  2. 🤝 Trust:  When you request that your potential investor sign an NDA, it gives the impression that you either don’t understand the early-stage financing ecosystem – or that you do, but that you don’t trust this particular investor (not a great start to any relationship). 

  3. 💷 Expenses: Drafting and reviewing an NDA requires the expenditure of legal fees for the investor (and if they’re dealing with hundreds or thousands of investment opportunities, this becomes incredibly expensive).

So while we know it can feel scary sharing information about your business without an NDA, in the case of potential investors, you just have to bite the bullet and do it anyway.

2. Noteworthy News:
How will a Labour Government change the UK tech industry? 👩‍💻

With the new Labour Government in office, there are changes coming to the UK tech sector.

⛑️ First, safety.

A key priority is introducing “binding regulation” that will improve AI safety and address risks associated with the tech. 

The government will also conduct a Strategic Defence Review to address cybersecurity threats, particularly from nation-state actors like China.  

🌱 And secondly, growth.

The government is looking to transform the UK into a tech superpower, so it is likely to balance these new regulations by investing in promising AI initiatives. It will look to implement process intelligence and data-driven methods to drive digital transformation, removing inefficiencies within UK businesses.

It also has plans to create a National Data Library. This would support existing data-driven public services, remove barriers for the creation of new data centers and accelerate the use of digital technology and AI.

Why should this matter to you? 

Well, a few reasons. 

First, keep an eye out for new AI regulations so that you can make sure your business stays compliant. Same goes for cybersecurity; there will probably be higher requirements announced in the near future that businesses must comply with. 

Second, with the creation of a National Data Library, any startups handling sensitive data will need to ensure robust data protection measures and compliance with relevant regulations like the UK GDPR.

And lastly there will probably be a lot of opportunities in the AI and digital transformation space, especially as it relates to the public sector. So if this is your niche, keep your eye out for grants, funding and new incentives.  

3. Your August Legal Reminder:
Have you checked whether your brand name and logo are protected? ™️

Many small business owners assume that trademarking their logo alone or registering with their registrar (in the UK this is Companies House) will safeguard their business name.

But by only filing a visually distinct graphical representation of a particular word, or by registering with Companies House, you’re probably not guaranteeing exclusive protection of your brand. 

This is because you can only legally protect your brand name, logo or slogan by registering it as a trademark with a trademark registry (or proving unregistered passing off rights which is super tough). Registered trademarks can include not only words but also logos, sounds, smells, colours and more. 

So to make sure your brand name and logo are fully protected, make sure your trademark registration fully covers all the unique aspects of your brand. ✅

4. Upcoming Entrepreneurial Events 🤓

August 9th: Lunch and Learn ️Legal mistakes to avoid when running a small business – SuLe’s co-founder, Patricia Wing, will uncover the top six legal pitfalls start-up founders face and share proven strategies to avoid them, allowing you to focus on your business.

August 14th: Fustion 42. Legal for Startups – SuLe’s co-founder, Patricia Wing, will be breaking down which investment documents are right for your funding round.

August 23rd-26th: Techstars Startup Weekend – meet the very best mentors, investors, co-founders and sponsors over an action-packed three days.

5. Funding Opportunities

💰Eureka collaborative R&D: Eurostars 3 Call 7: UK-registered organisations can apply for a share of up to £2.5 million for collaborative research and development (R&D) in partnership with organisations from participating Eurostars countries.

💰 Flexible AI Upskilling Fund pilot: Apply for funding for up to 50% of the cost of AI skills training and other AI upskilling activities within your business. 

💰 UnLtd Awards: Social entrepreneurs/ventures can apply for a combination of funding and support, up to £18,000. 

💰 Immerse Catalyst: This accelerator is designed for established founders wanting to scale their businesses. The accelerator ends with a Demo Day, offering a platform for pitching to investors and accessing a £25k grant funding pot.

💰 The £100k Launchpad: Through this initiative, entrepreneurs can secure £100,000 worth of cash (£10k) and products and resources (£90k) to launch or scale their business.

Happy businessing, see you in September. 🫡

– The SuLe Team 

P.S. If you have questions about whether something in this email applies to your business, we’re just a free 15 min consultation away. ;)