When Should You Protect Your App Idea with an NDA?

Data Security

Every month, we get a handful of inquiries from folks with an app idea.

However, before talking with us about the generalities of their project, many ask us to sign a non-disclosure agreement (NDA) . Sometimes that NDA is super heavy-handed and one-sided.

We get it – you’re excited at the possibilities your idea brings forward, and you want to protect your app idea from being stolen Winklevoss-style. We understand where you’re coming from.

But signing an NDA at this phase would be a problem — for both of us. Let’s outline why, and provide a better way to approach the use of NDAs to protect your app idea.

Why We Won’t Sign an NDA Before Our First Conversation

Asking your prospective development firm to sign an NDA immediately isn’t the best approach. Here’s why we, and most any non-desperate software agencies, won’t sign one right off the bat.

Overly Restrictive. An NDA is a document that carries restrictions against us for years, or in perpetuity. It is a non-starter to ask us to sign one if we have no idea if we are even going to work together.

Conflicts. If we don’t have any idea what your app is about, and we sign an NDA, we could immediately be in conflict with one of the dozens of app projects we are working on (or have worked on). We need a general idea of what you want to do before it’s NDA o’clock.

The Value of an Idea. Your idea has some value, but odds are someone is already working on it, has the same or similar idea, or has already tried. That is to say, your early-stage idea in elevator pitch form doesn’t have a lot of value in and of itself. Everything in combination with it – the go-to-market strategy, branding, product execution, tech stack, monetization, customer acquisition strategy, growth plan, etc. – is where the value accumulates.

The Stealing of Ideas. We are a full-time, booked-up, highly-rated, profitable web app and mobile app firm. We do not have time, and it does not make sense risk-to-return-wise, for us to chase product ideas.

I’m not saying we will never sign a non-disclosure agreement. In fact, the majority of our projects are under NDA. It’s the timing and structure of that NDA that matters.

A Guide to Funding & Monetizing Your App

Wondering what your options are for funding your app idea? What about monetizing it? From various funding models to the most common monetization strategies, the Guide to Funding & Monetizing Your App has the answers you're looking for. If you're curious to know what works and what doesn't, plus get some actual cost ranges for 5 common startup costs, make sure to download this free PDF.

When Not to Ask for an NDA

Speaking of timing, it’s generally poor practice to ask for an NDA if you are only in idea stage, and do not have any of the following:

  1. Go-to-market strategy
  2. Branding
  3. Funding / budget
  4. Monetization strategy
  5. Customer acquisition strategy
  6. Growth plan.

If you’re at this stage, I highly recommend you read our post on what to do next after you have your big app idea.

When it Makes Sense to Ask for an NDA

If you have some or all of the above list complete, or at the very least outlined, you’re ready to talk to an app development firm. But don’t lead your engagement with a request to sign an NDA – most won’t sign, for the reasons I outlined above.

Instead, have a general conversation designed to give enough information about your project so the firm knows a little bit about it, and for you both to see if the cornerstones of project/agency fit are in place. Those cornerstones are:

  1. Competency: The firm has the experience and track record to successfully do the work; you have the experience and track record to do your part.
  2. Timeline: Your desired timeline can be met by the firm, or their timelines are acceptable to you.
  3. Culture: You feel like you can work well together.
  4. Budget: What you have allotted is reasonable, or the range of costs the agency provides is feasible for you.

When I say “give enough information about your project so the firm knows a little bit about it,” here’s what I mean:

“The project is a mobile app for the fitness space that connects to a smart device to read data, compute it, and send commands back to the hardware.”

Or, you can say something like, “I need to build a B2C SaaS app that deals with multiple currencies, where users can pool funds to split large purchases.”

That level of detail, and any more you’re willing to go into, is enough for a firm to share some potentially similar examples, walk through their process, give some start dates or references, and provide high-level budget ranges.

It’s also enough for the firm to ask you questions about your project, and how well-developed the idea is. You can answer in as much detail as you feel comfortable.

After that conversation, you’ll have a better idea where each party stands on the aforementioned cornerstones. Both you and the prospective app development firm should have a general feeling about whether or not you can proceed in more formalized project negotiations. If so, it’s suitable to request a fair, mutual, not-heavy-handed NDA to be signed by both parties at this point.

The Steps to Take

Don’t come in NDAs blazin’. Instead:

  1. Flesh out your app idea before contacting the firm.
  2. Have a high-level conversation with the firm to see if there is a general fit on the cornerstones mentioned above, and to ensure there are no conflicts.
  3. If everything lines up, you can request a mutual NDA be signed.

Note that not all agencies will sign NDAs, or can sign NDAs if the language is super broad and there is a potential conflict with an existing project the firm has worked on. At that point, you can likely negotiate on a clause or two to be fair to both parties. Further, some won’t sign an NDA without a project contract in place. Those are case-by-case approaches to take.

At the end of the day, though, don’t start the conversation about your app idea with an NDA. Start it with a conversation. That’s the key to starting a successful partnership off on the right foot.

Related Posts

  • Wondering what your options are for funding your app idea? What about monetizing it? From various funding models to the most common monetization strategies, the Guide to Funding & Monetizing Your App has the answers you're looking for.