How to Prevent Venture Capitalists from Stealing Your Idea

When presenting information to potential investors, you have to be careful. Before meeting any investor whom you don't know personally, do your own due diligence. Has this investor funded a potential competitor? How well does the investor understand your market space? What is the investor's reputation in the start-up community?

When you first talk to investors, ask them questions about their expertise and investing experience. Give investors enough information to get them interested in your business, but don't provide any critical or confidential details until you are comfortable with them as potential partners. Most venture capitalists won't sign nondisclosure agreements, so the responsibility of protecting your information is yours.

Most venture capitalists are ethical and don't "steal" businessplans. However, VCs review a number of similar business plans and ideas and often fund only one of them, so it may appear as if the investor is stealing your idea, while really they are not.

Most investors are busy and won't be very patient when meeting with start-ups. They are inundated with companies looking for funding. The key to a successful investor meeting -- and to protecting your intellectual property -- is getting the investors interested in the concept and comfortable with the team and technology without giving away too much about your start-up. Don't be paranoid, but be smart and prepared.

By Guy Kawasaki


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