How to protect your business idea while you build your startup. I’ve been kind of hard-line in this space on the value of ideas. I’ve said they are a dime a dozen, aren’t owned, can’t be sold. My personal favorite is this one:
I’ve posted here on what you do with an idea to make money from it; and also here and here on how you can’t just sell it.
Companies don’t buy ideas. You can’t just sell it. You say it’s great, but I say all ideas are brilliant before execution.
Investors don’t invest in ideas. So don’t share it with investors at all when it’s just an idea. It has no value at that point, and you don’t even own it. Real investors don’t steal your idea but resent that you’ve wasted your time with just an idea. Investors never invest in ideas alone. Rarely, they invest in a specific, known entrepreneur, as early as idea stage. But that’s a very special case. You know who you are. And if you aren’t sure, then you aren’t that person.
First, share it carefully only with people you trust and want on your team. The next step after idea stage is recruiting a team. Trust is essential. Having skills and experience you need is also essential. Bring them into it so they become co-founders and help you develop from idea to business, motivated by sharing the upside. And real people will sign non-disclosure agreements because they don’t have the same reason that investors have not to.
Maybe, later on, after you’ve done the work, recruited a team, met milestones, and gained traction, then you share it with investors because they don’t steal ideas. Real investors want the team in place so they can invest in execution, not execute themselves. Real investors don’t steal ideas and don’t sign non-disclosure documents. Make sure you do your homework, check backgrounds and history, for investors who are real and not conflicted with an existing investment.
(Image: Flickr cc: Snail_race)
Comments
Tim, do you or any patent attny friends know how the recent changes in the patent laws effect this? First use carried some weight in the past as I understood it, is that still true do you think?
John, the way patent law works from what I see – layman’s view – is that it takes a real professional to be able to evaluate the power and potential of specific patents. They have to do it on a case by case basis. Patents seem to still offer good protection in some fields, such as pharma; but patent protection in software is hit and miss at best, with a whole lot more miss than hit.
Hey Tim,
Long time no chat to. How’re you doing these days?