can Angel Investors Steal My Startup Idea ?

can Angel Investors Steal My Startup Idea ?

• Disseminate the knowledge in stages.

• If the investor agrees to investigate further, send your pitch deck/IM with essential but not detailed information.
• We can't really argue about providing the information with or without signing a term-sheet if you're just getting started.

As a seed capital facilitator, I've been asked the following questions many times:

How do I know you won't steal and implement my business idea?

Do you agree to sign an NDA before pursuing my idea?

You meet so many people; what if my strategies/data reach my rivals through leaks?

Questions like this cause trust problems among entrepreneurs who are hesitant to share their business concept because they think the entry barriers are too low to safeguard them. As someone who has been on both sides of the debate, all I can say is that you should not be afraid to share your thoughts. And this does not just apply to sharing information with VCs, but with anybody you believe might be a prospective partner, client, mentor, investor, team member, and so on.

Did you inquire as to why?

Because your business concept is nothing more than a notion in your mind until you make it a reality. You cannot avoid providing critical information with potential stakeholders for the sake of respecting their time.

You may, however, share the information with the investors in stages, as shown below.

The First Phase: Breaking the Ice

Begin by sending a well-written email outlining the What, Why, Who, and How of your business concept. This is the stage at which you explicitly ask the investor if he or she wants to pursue it further in terms of investing in your concept. At this point, you'll need a lot of patience and infrequent follow-ups since the investors are busy with their companies.

Phase 2: Increasing Interest

If the investor agrees to go further into your startup concept, provide your pitch deck/IM with key but not detailed information. For those in the early stages, since you won't have much traction or analytics to present, concentrate on the slides that address the following topics:

Your statement of the problem and your solution,

landscape of competition,

monetisation,

marketing strategy,

the founding group and

fundraise, i.e. beg for and utilize money

Important: You are not required to disclose your detailed financial forecasts or "the secret sauce" until specifically requested. You're unlikely to get to that point with the majority of people.

The third stage is to open it up.

If things progress and go well to the point that a meeting or detailed conversation is planned, you should be cautious about your privacy. After all, a serious investor with a solid reputation would not have time to execute your business concept or locate someone as enthusiastic as you to do the same. By this point, you should have a good understanding of how they function and communicate.

If everything seems to be in order, follow your instincts and avoid delaying actions that may disrupt the communication line. I think that angel investors need to understand your concept and execution methods in depth since they are making large bets with their money at a stage when no one else cares whether you're creating the next Google or Apple.

We can't really argue releasing the material with or without signing a term-sheet if you're at the concept stage—it doesn't matter at the idea stage, in my humble view.

To summarize, the odds are slim that investors (or anybody else) would back your business concept and have the time, enthusiasm, and energy to execute it the way you can. Without the courage and perseverance to carry them out, ideas are meaningless.