Startup founders regularly ask us to sign non-disclosure agreements (NDAs). We never do. In fact, like almost every VC, we have a firm policy against signing them. But this doesn’t stop founders from asking — and I think doing so is a big mistake.

Here’s the typical email exchange:
Founder: I’d like to tell you about our exciting startup.
Me: Great. Please send me your deck and I’ll let you know if it looks like a fit for us.
Founder: Please sign the attached NDA and I’ll send you the deck.
Me: We don’t sign NDAs.
Founder: No worries. …


The Covid crisis provides startups with a great opportunity to do a bottoms-up reevaluation of their businesses.
The Covid crisis provides startups with a great opportunity to do a bottoms-up reevaluation of their businesses.

The Covid-19 pandemic that we are all facing has been, first and foremost, a great personal tragedy. So many lives have been lost and so many people have suffered. I suspect it will scar our collective psyche for many years to come. In addition to this assault on so many people’s physical health, there has also been a significant assault on our mental and emotional health. This pandemic has been unprecedented in our lives and has caused us much turmoil, resulting in an increase in stress, feelings of helplessness, isolation, loneliness, and depression.

In addition to the immense human toll…


In an effort to save time and money, investors and founders alike have made the convertible note (and its cousins, YC’s SAFE and 500 Startups’ KISS) the investment contract of choice for companies raising angel, pre-seed, seed or bridge rounds. For simplicity’s sake, I will refer to these agreements collectively as “notes.”

Almost all notes include one or both of the financial provisions known as a Discount and a Valuation Cap.

The Discount represents the percentage by which the conversion price will be lower than the price paid by new investors at the subsequent priced round. For example, if a…


I’m always amazed at how many early-stage investors will commit to investing in a company after only one phone call or meeting — especially those who have a fiduciary duty to LPs. Unless you employ a shotgun strategy of investing in every startup whose founders have a pulse and hoping the law of averages works in your favor, how can you possibly learn enough about a company and its founders after a one-hour interaction to persuade you to invest? I certainly understand passing on a deal after a first meeting, but I don’t understand investing.

As a byproduct of these…


Each and every startup founder needs a good legal counselor to provide sound advice. I use the term “legal counselor” instead of “lawyer” or “attorney” intentionally. Yes, we rely on attorneys to draft agreements and prepare filings. But I believe that the most important role an attorney can play for a startup is that of counselor — providing sound legal advice. Founders need to understand the legal implications of their decisions. And this is where a good attorney can help. However, there is a tendency among some founders to abdicate decision-making authority to their lawyers. …


According to the results of a recently published study by a highly credible research organization, 0.00% of financial projections issued by startup companies end up being accurate one year after they are issued. Okay, while the research organization and the study may be fictitious, I have no reason to doubt the veracity of the conclusion. In my experience, financial projections issued by startups not only end up being inaccurate, but the actual and projected figures often bear no resemblance to each other whatsoever.

So why do we, and most venture capital investors, require them from startups seeking investment? Just as…


As consumers, we all get distracted. It seems to happen more easily and frequently these days. Instead of focusing on work or driving or watching the kids, we constantly check Facebook, email, Twitter, and Instagram. And it seems to have led us to suffer from exceedingly short attention spans. We prefer bite-size news blurbs to long-form journalism. We fast forward through TV commercials and binge-watch shows because we are too impatient to wait. This pandemic of impatience has become so pervasive that even the companies that enable our distractions are beginning to take some corrective action. Apple, for instance, has…


With Amazon disrupting and dominating more and more industries, how can your business thrive? Unless your name is Walmart, I don’t recommend competing directly against Amazon. Instead of going head-to-head with Amazon, I suggest focusing on how you can out-flank them.

Start by defining Amazon’s strengths so you know what areas to avoid. For example, price. Due to Amazon’s massive scale and efficient distribution channels, it is generally the low-price leader. And it has demonstrated its willingness to sell products below cost for an extended period of time in order to kill off competitors that engage them in a price…


Conventional thinking in venture capital is that success requires aiming for the fences. Home runs (or even grand slams) are necessary to generate a reasonable rate of return in light of the large majority of portfolio companies that go out of business. But is this the most sensible approach?

Identifying unicorns at the nascent stage is nearly impossible. Especially because early-stage investors are forced to put greater emphasis on subjective or qualitative factors like the founders’ personalities and team dynamics rather than more analytical or quantitative factors like a company’s KPIs. How many of us can honestly say that had…


This is a short warning to entrepreneurs. Founders often start a company based on their passion for something. That’s fine as long as they are also solving a problem or otherwise addressing the needs of a clearly defined target market.

The advice that is dispensed too often these days is to pursue your passion, do something you love. That’s all well and good as long as your passion intersects with a problem that customers will pay you to solve. But don’t start a business for the sole purpose of pursuing something you’re passionate about. That’s called a hobby. …

Phil Nadel

Founder, Forefront Venture Partners (formerly Barbara Corcoran Venture Partners)

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