How much should I tell investors about my idea?
Friday, February 8, 2013/
How do you tell potential investors about your idea without spilling every little detail and giving away the whole plan?
It’s a straightforward product, which makes it even harder to keep under wraps.
Many entrepreneurs have been faced with the difficulty of trying to keep a ‘secret’ whilst having to share at least some details to keep investors interested.
Whether at the start-up or exit stage of their business, the three best people an entrepreneur can have in their life are a brilliant and business-savvy lawyer; a brilliant and creative accountant; and a brilliant and realistic mentor.
I was lucky enough to find all three very early in my entrepreneurial life. As a matter of fact, I still have the same lawyer after nearly 25 years (Hi Geoffrey!).
I had the same accountant for 20 years (until he retired), and have found an amazing accounting firm to move on with. I have had four mentors in my life, with only one (my father) having seen me traverse my, up to now, 27 entrepreneurial years.
My lawyer taught me to assume the worst in people but strategise for the best result in business.
My accountant taught me there are two sets of numbers: those that tell you the past, and those that try and predict the future (and they are very rarely the same).
My mentors have all taught me to try and use the best, to pick the best, to choose the best, to compete with the best, to hire the best, to aim to be the best, and to hope for the best!
I asked my three advisors what I should do if faced with your predicament, and they all said the same thing: “Get an ironclad confidentiality agreement for people to sign.”
If you also have an introductory “teaser” letter that shows a broad-brush strategy for the business with some predictive numbers, and talk about the human capital behind what you do (the real value of the start-up), this then shows any prospective investor that you know your legal position, that you surround yourself with good advice, you engage good people, and you are ready for their financial and strategic input.
Early in my life I read a quote from Henry Ford, which essentially said, “I am not a smart person, but I know how to surround myself with smart people”.
I must remember to re-read this more often. Good luck!
Be honest about your situation: How vulnerability helps businesses thrive Sue Parker DARE Group founder
Own it: The 10 things you need to do to manage your personal brand Lisa Stephenson Who Am I Projects founder
Six invaluable lessons: What 20 years in aged care taught me about being an entrepreneur Natasha Chadwick NewDirection Care founder
An entrepreneurial superpower: Eight tips to help develop resilience Adala Bolto ZADI Training co-founder
Going through a lull? Five areas you should invest in when sales drop Tamara Alaveras and Sonia Majkic 3 Phase Marketing co-founders
Stop telling us how busy you are, it's boring and charmless Ian Whitworth Scene Change co-founder
Blandification™ and the state of modern branding Jeffrey Oley The Offices co-founder
Why you should find the right role for the right person — not the other way around Bruce Stronge Outfit founder