Stealth Startups are everywhere now.

It has become way too common for many startups to operate in stealth mode as long as they can.

While this can mean different things in different contexts.

But the aim is typically to limit what the world knows about the Startup's inner workings.

They don’t make public statements.

They don't disclose their products or services.

They don't openly seek endorsement of any kind.

For these startups, it also means acquiring investors and funding as discreetly as possible.

Confidentiality is their major game.

But, is it worth it?

That's for you to decide.

As a legal service provider, my goal is to ensure your legal protection and your success.

But that doesn't mean you should slide a hefty 20-page NDA in your investors' faces before even sharing a snippet about your product or business.

Then what to do instead?

I will tell you!

Two Important Things To Keep In Mind:

(1) NDAs are important but don’t throw them everywhere

Obviously, if some information is important for your startup, you can’t just tell this to everyone.

BUT, not everything about your business is proprietary and needs to be protected.

That's where it's important to distinguish between what truly needs protection and what doesn't.

There are situations where you might need to disclose crucial information, such as when seeking funds.

And here's the catch.

Many investors, especially Angels and VCs, are not keen on NDAs, especially in initial meetings.

Asking them to sign an NDA right at the first meeting can be a major turn-off.

You need to remember that Investors get pitched hundreds of ideas.

And ideas are everywhere - what matters is the execution and the team.

The Investors don't have the time to put their energy into executing every idea.

That's why they invest in you.

But remember, you might also come across some bad investors.

Then what to do instead?

If you have some really important information, don’t disclose it in the first place.

That's the best thing you can do.

You can broadly explain it to them and ask them to sign an NDA at a subsequent stage.

But, what if you are dealing with other third parties?

Well, it depends on the potential benefits of the partnership and how likely they are to nab your ideas.

You can probably tell a lot about the person's character at the first meeting.

And what you can also do is have a risk strategy in place.

Reveal a little bit, and see how they react.

And again, for the subsequent meeting, you can use a watertight NDA and not some generic internet-downloaded template.

(2) Protecting IP! Such as Patents

NDAs more often than not only apply to a person or a few people.

And that's why many founders choose to hide their new technology until they secure a patent.

IPs are important but not in the way you might think

IP registration takes a long time and costs a lot of money.

And you can’t wait forever for it.

The common perception is that a patent secures your product completely, preventing others from even attempting to make or sell something similar.

That's not entirely true.

While it does protect you to some extent by deterring others from copying your product or technology.

You would still find cheaper knockoffs of almost everything.

And you as a startup won’t have the resources to sue everyone.

And it’s just not viable many times.

I am only telling you this to help you face the reality of the situation.

But, it does not make patents any less valuable.

In fact, they are intangible assets of your Company and can benefit your business in various ways

You can sell them or license them to larger corporations, turning your IP into a valuable asset.

So, if you have something unique, filing for patents is definitely a wise move.

Because it’s usually not the first to invent, but the first to file that gets the right to it.

That's it!

If you are building in Stealth, I hope this guide helps you get a better idea of the legal side of protecting your biz.

And also helps you focus on using your resources more effectively.

If you are also hiring people to work on an idea in stealth, then the Agreements you get for them also become important.

Whether it's an employee or a freelancer, don't settle for generic or something downloaded from the internet.

What you require instead is something that fits your business and your goals.

Good luck!

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