A non-disclosure agreement is designed to protect your company’s data and ideas from unauthorized use by outside parties, such as funders, advisors, or employees. Without the non-disclosure agreement, outside parties my find it a simple matter to take what you’ve developed, and freely use it.
There are two types of non-disclosure agreement: unilateral and bilateral.
Unilateral non-disclosure agreements are where one party needs to remain secret where the other party can disclose information provided. One way to look at a unilateral non-disclosure agreement is: "I want to disclose information to you, but I want you to keep it secret. But, whatever you tell me, I don't have to keep secret."
A bilateral non-disclosure agreement—also known as a mutual non-disclosure agreement—is where both parties will keep each other's disclosed information secret. Mutual NDAs usually makes the terms of the document more equitable for both parties.
Each types of NDA has its own place. An unilateral NDA is suitable in a vendor/client situation, whereas a merger or acquisition would require a mutual NDA.