Confidentiality

The obligation not to disclose or use information learned in one relationship for another purpose.

Example

An investor declining to share one portfolio company's metrics with a founder in the same sector.

Important

Information learned as an investor in one company should never be used to benefit another, and discretion is what sustains founders' willingness to share.

Related terms

  • Conflict of Interest — A situation in which a person's personal or other professional interests could influence their duty to act in another party's interests.
  • Information Rights — A contractual right for an investor to receive a private company's financial statements and other operating updates on a regular basis.

Lessons that explain it

  • Founders send the best deals to investors who treated them well — Founders are the most valuable part of an investor's network. Responding quickly, saying no clearly, being useful without being asked for credit and behaving well when things go wrong earns their referrals. (9 min)
  • The right expert on one call can change a diligence conclusion — An expert bench is a set of people with deep knowledge in your focus areas - operators, engineers, clinicians, lawyers - who can help check claims quickly. It is built before it is needed and treated with respect. (9 min)
  • The references you find yourself are the ones that matter — Back-channel references come from people who worked with a founder but were not suggested by them. Structured, careful conversations with them reveal patterns that curated references cannot. (10 min)
  • What you learn in one company is not yours to use in another — Investors see confidential information across companies. Handling conflicts, competitive overlap and confidential data properly protects founders, your reputation and your ability to keep investing. (10 min)

All 578 terms in the Investing glossary