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How do you protect your business ideas from investors?

Discussion in 'Making Money' started by furby, Jul 27, 2012.

  1. furby

    furby Newbie

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    Ok so here you go, you have a nice business idea, with a really extensive and well made business plan, and then you present it to potential investors.. Question is, how do you make sure that some of the investors and even big companies will not rip off your ideas and start a business of their own? I have heard of small businesses being overtaken by big ones using their business ideas, making them even better... Of course they have the money and resources so it's not impossible... But if you are starting off as a small company, how can you protect all your ideas to a lot of potential investors?
     
  2. Crystical

    Crystical Registered Member

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    How about they sign a contract?
     
  3. iamagoodp3rson

    iamagoodp3rson Registered Member

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    Well i guess you will have to get an US or international patent. I am not sure if that is the right way to do it.
     
  4. 520am

    520am Regular Member

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    I always let them sign a confidentiality agreement.
    To be 100% sure you may involve a lawyer to check that contract.
     
  5. Duffers5000

    Duffers5000 Elite Member

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    Yes thats a problem for small business people. you need to target who you are pitching your ideas to. Once you have selected people you think can help you, you need to initially sell the concept, they dont have to see the exact workings of your business model until you have reached advanced negotiations and you are happy to disclose more.

    Most investors will invest in people, if they believe that you are the driving force that can make this project happen then they will be investing in you and your idea. If they feel that anyone could replicate the plan then there is a good chance you will be shown the door.
     
  6. Zapdos

    Zapdos Power Member

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    If you have to worry about that, you're doing it wrong.

    "Investors" here on BHW... Bad idea because of what you say. Not everyone is like it, but it seems many here are trying to make a quick buck so stealing ideas would seem perfectly fine.
    "Investors" you find locally, probably still a bad idea.
    Companies/CEOs can be bad. If they have enough money, a contract won't do much. They can drop millions on lawyers.

    Instead, I would suggest looking for registered investors with a track record for doing so. Look for people/groups called "Angels"; such as "Angel", "Angel investor", "Angel group", "Angel network." They are individuals or groups of people that invest in small start ups. One of the more known ways to get in contact with them is http://ycombinator.com/ . You have to have a genuine project or product. Get rich scheme websites like most see on here won't fly.
     
  7. 520am

    520am Regular Member

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    We had a project with an investor from a company a while ago.
    The investor was the CEO from a mid-sized company. We didn't sign a contract because his company does totally different stuff.
    I think it always depends on the project and how much knowledge and time needs to be invested.
    But I would not trust a investor you haven't met before.
     
  8. Typlo

    Typlo Jr. VIP Jr. VIP Premium Member

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    You're right in being concerned about protecting your idea. If you share this with others you should have them at least sign a contract (like NDA - non-disclosure agreement) to protect your idea. But keep in mind that if they did share your idea you'd need to spend the $$$ to sue 'em.
    May want to keep the idea 'close to the vest' and try to get your idea developed in parts (so others couldn't determine the overall idea).
    Hope that helped!