Protect idea while searching for investor

Andrea B.

Baically, I am sure similar question has been asked before, but I wanted to propose a solution and would like feedback as to if it would be binding.

Basically, someone has a novel business idea (web based), which had a few unique properties/formats which made it different from other such systems;

If they were showing to a potential investor, the risks are obvious (no investment, but they run with idea themselves).

Could they map out the idea on paper and have the potential investor sign (with witness) the mapped out idea page to confirm they have seen it and accept it is the "property" of the named?

In the case of them "stealing" idea and it becoming profitable, would there be a strong case and evidence for legal recourse?

Thanks. Just trying to protect on "the cheap".

AstonMartin

The investor would limit themselves in the future before knowing much about your idea so I cant see experienced investors being willing to do this.

TheCostumeShop.ie: Ronan

The reason we wouldnt do this is because if your idea is "have a great website and sell ads on it", then later if we start or invest in a business which later has ads on it you'd have cause to say that you had a "similar" idea and we stole your idea. Since there's nothing in it for us, we wouldnt sign an NDA or help you out incase it ends up biting us in the ass.

It is very hard to protect web based ideas as they only need to be changed and improved slightly to get around patents. If your serious you need to talk to an IP lawyer.

Andrea B.

Many thanks for replies, but as per original question;
if the potential investor signed it, would that be enough protection to allow legal recourse?

TheCostumeShop.ie: Ronan

No

YouBuyLocal

TheCostumeShop.ie: Ronan wrote: »

The reason we wouldnt do this is because if your idea is "have a great website and sell ads on it", then later if we start or invest in a business which later has ads on it you'd have cause to say that you had a "similar" idea and we stole your idea. Since there's nothing in it for us, we wouldnt sign an NDA or help you out incase it ends up biting us in the ass.

It is very hard to protect web based ideas as they only need to be changed and improved slightly to get around patents. If your serious you need to talk to an IP lawyer.

No

Could you not have just said no in the first place if that is the answer because these two statements are contradictory. Why would you care about limiting yourself in the future if it had no legal recourse?

Of course it is naive to think of NDAs, and I was naive about it at the start as well. If the idea is good and the investor likes you he will invest. If he doesn't like you but likes the idea then he'll put it to someone else he knows and get him to run it. In that case you will not necessarily lose anything because you can still find a new way and compete with him, and that is validating and it will help to build the market (if it is really as new and innovative as all that).

But the truth is he will probably not understand it as web-businesses are very nuanced and what makes them successful or failures are things that are very subtle and are mostly to do with the dev team and business-creativity, not the seminal idea.

The main thing is building a community and spinning off revenue streams, which is hard. Going for the revenue too early is easy to do and can kill it. But then you need to be able to make money as you can't live on air. Which means you need to build the dev team and have a very clear idea of both the pull of the site, the way you will build a core community and what they will actually do on the site, which is about understand what kinds of behaviour people exhibit online + at least three revenue streams, because one or two or more won't work. You don't want a pay barrier.

Thats unless your idea is just simple ecommerce, buying and sell products, but thats not how you described it in your brief description.

Find a lead developer and ask him what you need out of devs. Don't pay him, just ask for his help to find out what the best way of going about the development is. If you ask enough experienced developers someone will help you out with valuable advice. Most won't, they will tell you to learn to develop it yourself. Thats a no-go for many people and there is so much work on the busienss side to do that it could slow you down heavily. You might use Elgg or Drupal or you might find some people who will develop it from scratch for a share in the business. You can find some devs on Grad Ireland, its free. There are lots of Brazilian dev around Dublin learning English who are looking for something to do as they can't legally work. I have two guys like that and they are great. Often they will work on a project for free because they don't want to be doing nothing. Then if the idea is good enough they will stay with you when they can legally work. In this circumstance be prepared to give away more than 50% of the business and take the role as commercial lead. Make sure they sign something saying the business owns the code. It would be wise to set up a ltd company if you have the cash (this is just one way of going about it, finding and talking to the devs is the hardest bit as you will have to interview or meet anything up to 50 of them).

Then go to an investor when you have a platform live and a growing user-base. An investor won't even talk to you because they won't feel they have enough competency to judge the business on a concept and have opportunity costs involved in even speaking to you. There are lots of web-businesses and most will fail.

Good luck dude

TheCostumeShop.ie: Ronan

YouBuyLocal wrote: »

Could you not have just said no in the first place if that is the answer because these two statements are contradictory. Why would you care about limiting yourself in the future if it had no legal recourse?

I was expanding on @AstonMartins input, the statements are not contradictory. Above legal recourse there are reputational issues, an investor wouldn't want the hassle of being accused of ripping off the idea and by signing an NDA there is legal recourse against her / him, but it offers no protection against a 3rd party.

Web Idea's are very hard, if not impossible to protect. Do you think Groupon would have so many competitors if it wasn't? Zynga made Billions in revenue making social versions of other peoples games.

YouBuyLocal wrote: »

Find a lead developer and ask him what you need out of devs. Don't pay him....

Limiting yourself to developers who don't value their input and time enough to charge for it does say a lot about you. Personally I'd rather pay the best guy in the industry for their advice and get competent input. Good "lead" developers aren't suffering from lack of demand for their services.

YouBuyLocal wrote: »

An investor won't even talk to you because they won't feel they have enough competency to judge the business on a concept and have opportunity costs involved in even speaking to you.

An investor will never invest in a business we don't understand, however there are a lot of intelligent investors who do understand technology.

YouBuyLocal wrote: »

There are lots of web-businesses and most will fail.

This is the most ridiculous quote. Just because some businesses fail doesn't mean you shouldn't try, it just means you might have to try nine times before you succeed on the tenth. If you have that attitude its an easy cop out as to why you haven't achieved anything worthwhile yet. It's comforting being in a failing majority, but it's more fun aiming and then being successful.

YouBuyLocal

Good for you man, I am put in my place.