How important is it for investors to have a non-compete clause among founders? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Non-competes, NDA's, and other similar agreements are pretty worthless to start ups in and of themselves. Even when they are enforceable, start ups aren't going to go through litigation to do it, and in most jurisdictions to be enforceable, you need consideration on both sides, so you have to pay something like 1/2 salary during the restriction period. Again, that's not really an option for most start ups. Most of their value comes from people thinking they are bound by them, and to this end, they can work to a degree.
However, far more important than any written agreement is an assessment of the intent of the parties. I do not need an NDA with someone I trust, and conversely, if I thought I needed an NDA to coerce silence, I would be really careful about what I shared.
It is a worrying sign if someone is saying they might want to work for a direct competitor at this stage. Not because that might happen, but because he already thinks it might happen. You would expect an early stage executive to be squarely focused on your company. However, at least he is being honest about it.
Personally, I wouldn't care if someone who worked for me went to a competitor. The idea they will somehow bring mission critical information that will allow a competitor to beat you is, in my opinion, very naive (though I am probably in the minority on that). The bigger problem is why he would want to do that in the first place.
So, I would say you do not need a non-compete, but you do need to make sure this is a good fit to start with. From what you described, it is hard to imagine it could be. Not only does the intent sound off, but the equity request isn't tenable either. I would just focus on finding the most committed, capable person you can, and not worry too much about paperwork.
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