|How do you pitch your idea to investors without giving away too much?
It is not a secret that entrepreneurs jealously guard their business ideas. But today’s innovators are under pressure to open up about their secrets.
When you first start talking to investors, you tend to be protective of your new business ideas, but knowing that you need their money you have to sell the idea.You need to do a lot of due diligence on a potential investor before showing up and laying out something that you consider to be confidential. Understand that any investor that’s been around for any extended period of time, generally speaking, has done so because of their integrity in dealing with entrepreneurs.”
How Business Ideas Get Stolen
Sharing ideas is one of the ways a business owner presents future growth potential to investors and lenders when they are trying to secure financing. It is also not uncommon for business owners to discuss their ideas with employees and other business professionals for a myriad of reasons. In some cases, whether intentional or accidental, the information finds its way to wrong people or those that want make use of the idea.
Now, let’s look at how to protect your cherished business idea.
Disclose Your Idea In Phases
Disclose information in increasing amounts as the deal progresses. Be sure that the balance of power in the deal remains relatively even in terms of oral commitments, commitments through information disclosure, money or contracts. The information disclosure should start with general concepts and progress to detail at the contract stage. Be sure to keep careful notes on what, when and where information was disclosed and who else was present at the meetings. These records can be extremely helpful if you ever end up in court.
Always disclose the minimum necessary to close the deal, without being fraudulent or misleading. This allows you maintain the most control over your product or idea, as well as protecting your options for changing the timeline or details later if needed. Once the deal is closed and the contract is signed, both parties should be more committed to the process and protecting information.
Confidentiality agreements can help protect the parties both receiving and disclosing information.
A solid confidentiality agreement needs to indicate what information being disclosed is to remain confidential and for how long. While some companies place indefinite time restrictions, it is universally better if you give the third party signers a time frame that they have to honor with their silence in an effort to lessen their burden. Other confidentiality agreement options can include:
Always remember – no business relationship is considered confidential unless a confidentiality agreement is signed by the parties. This is the only way to legally secure your business ideas from theft.
I want to encourage you with a statement by Frank Nneji of ABC Transport to MBA Students at PAN African University. He said “The Most Important Part of an Idea is The Execution Power” and this power lies with you (the initiator). With this in mind, go ahead and share your business idea with investors armed with the information you have received from this article.
You Will Succeed!
– Chinedum Azuh
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