Every few weeks, somewhere, a founding team about to start working together asks for an NDA template to sign between themselves. The instinct is sound: something valuable is being shared, so protect it. The instrument is usually the wrong one.
I litigated cofounder disputes for years. I do not remember a single case that turned on an NDA between cofounders. I remember many that turned on what an NDA does not cover: who owned the work, who could walk away with what, and what a departing founder was allowed to do next.
What an NDA does, and what it cannot do
An NDA does one narrow thing: it obliges the parties to keep defined information confidential. Between two people building a company together, that obligation is close to unenforceable in practice. You cannot build side by side while hiding the substance from each other, and when everything is shared daily, proving that one specific piece of information was covered, misused and damaging is a litigator's nightmare. The document exists. The protection mostly does not.
Worse, the NDA gives a false sense of coverage. It says nothing about ownership. Nothing about what happens to the code, the customer list or the roadmap when someone leaves. Nothing about a departing founder launching a competitor next month. Teams sign an NDA, feel protected, and skip the conversation that would have protected them.
Between cofounders, secrecy is not the real risk. Departure is.
What actually protects a founding team
The protections you are reaching for exist. They just live inside a founder agreement, not an NDA.
A confidentiality clause, first. Same core obligation as an NDA, but embedded in the document that also handles everything else, and written to survive departure. The person it really targets is not your cofounder today. It is your ex-cofounder next year.
An IP commitment, second. What each founder has built and will build on the project is committed to the future company. This is the clause that decides who keeps the code, which is what teams believe the NDA does. Who owns the IP before incorporation explains the mechanics.
Departure terms, third. What a leaver returns, what they keep, what they may do next. The customer list walking out the door is a departure problem, and only departure terms address it.
The one case where a real NDA earns its place
Before the team exists. You are exploring with a potential cofounder you barely know, sharing something genuinely sensitive, and you may go separate ways next month. A short mutual NDA for those exploratory weeks is reasonable, and it is standard enough that a serious counterpart will not blink. If they do blink, that also tells you something.
Once you decide to build together, graduate. The NDA was for strangers testing each other. Cofounders need the fuller instrument. One note of realism for later: investors, as a rule, do not sign NDAs to hear a pitch, and asking is widely read as a beginner's move. Your protection with investors is reputation, theirs and yours, not paper.
Before and after incorporation
Before incorporation, the founder agreement carries the confidentiality, IP and departure clauses. That is the window where these promises are cheapest to make. After incorporation, the same protections get restated in the company's formal documents, assignment agreements and, later, employment terms. The founder agreement is what covers the months when there is no company to hold anything.
Confidentiality, IP and departures belong in one signed document. Build it in plain language, before incorporation.