Will venture capital investors steal my idea?
C on November 19, I launched my stand-alone blog about venture investments, venture investors and startups IdeaBlog.ru , and I will publish here some posts from it with a slight delay. I still don’t have enough karma to post to the Startups collective blog, so for now I’ll post to a personal blog . Thanks to those who raised my karma.
Among startups, whose project is still at the pre-startup stages of its development, this is probably the most frequent question, and it is quite logical: they are required not only to describe the concept of his project in a business plan, but also to give a detailed breakdown of how manner and exactly where he plans to attract the first customers (ie, describe the project launch strategy), who exactly these first customers are, whether he communicated with potential customers, if so, with which, how he plans to conduct a marketing campaign, what are " bottlenecks "in the project and how about novateli startup intend them "embroider", etc., that is, in fact, the founders of a startup investor must present a step by step guidance on the development of its project. Naturally, this raises concerns - what if a business angel, a venture capital fund, or an investment advisor, if you have such detailed guidance and financial resources, simply “throw” the founders of the startup and implement the project?
Projects that are in startup and later stages of development , which already operate on the market and, therefore, no longer hide their idea and business model, which underlie the project, also have concerns - they should detail in their business plan describe what know-how is able to provide them a break from competitors, describe in detail the marketing moves required for successful development, reveal their technical solutions that are a competitive advantage of a startup, etc. Each company considers all this to be its trade secret, and here it is necessary to write everything, explain it and bring it on a silver platter ...
')
And finally, all startups, who, as a rule, do not have administrative resources, large financial resources, or, finally, deep legal knowledge, are interested in one more question: when they develop their start-up, will they not just out of business? Business is legalized, raiding technologies in Russia (and in the same States too - they simply have a more sophisticated legal form) worked out to perfection, and a grated-frayed investor is quite capable, if he has the desire, to easily circle a naive start-up enthusiast his brainchild, around the finger.
At the same time, let's look at the situation through the eyes of an investor: do you suggest that he invest in your belief that the idea and business model that you have invented will bring him a profit? After all, he invests his money (and often it does not matter here, small or considerable) in your project, he either doesn’t know you at all, or knows superficially, and no previous achievements are able to convince him that you are a good guy and will bring him a lot of money . There is only one way to convince him: to show that you have thought through everything in your project down to the smallest detail, that you understand the realities of the market in which you are going to work, clearly understand how and where you will find your first customers, who most likely are what arguments do you have to convince them that they should be your clients, how you will promote the project in the future, whether you have foreseen the scalability of the project, what is your competitive advantage, etc. The investor will ask him to explain every detail that is not very clear to him, will involve experts to verify your conclusions - but he has all the right to do it, this is his money, and you offer him to take the risk.
Nevertheless, there is a problem: start-ups are afraid that their ideas will be stolen, know-how, marketing skills or, in general, when everything is good, they will be thrown out of business, and investors will never invest even a penny in the business that they will not to study in detail. As a rule, investors always answer such questions of startups that, they say, they invest in a team, that the most important thing in a startup is a team that it will be much more expensive and troublesome to find a start-up founding team than to honestly share profits with startups, etc. d. All these words about the team, of course, are correct, but one thing should be clear to everyone: this is not a 100% protection of the founders of a startup from being hit by an investor.
Igor Vlasyuk, President of the Association “Private Investors of Ukraine” : There are business angels who are more properly called business devils. They are looking for attractive patents available to inventors, which they use as the basis for their startup, and select them in order to resell or implement the project on their own. Some business devils invest in projects they like, and then, when the project is developing successfully, they blur the share of the founders of a startup in the company and throw them out of business. These are raiders, and they exist on the market. Those people who constantly “revolve” in this environment - other investors, serial entrepreneurs, who realize not their first or second project, know these business devils and do not do anything with them. However, those startups who do not have such experience, they fall on the hook. Why do business devils throw startups instead of doing business with them? Because they lack 51%, they need 100% of the company, this is their principle.
We have about 40 business angels in the association. It could have been much more, but we are carefully filtering the people who belong to our association in order to prevent such business devils from entering it, because by “throwing” startups who have come to us in association with their projects, they will spoil our reputation, and the business devils will have the reputation of all our members. And the reputation for a real business angel is almost the most important thing he has.
David Tsiteladze, publisher of the Russian version of the magazine for business angels, venture investors and startups “The Angel Investor” : Raiding with respect to start-ups, patents, innovative developments and good business ideas is in Russia. But most business angels have a “code of honor,” and they will never even attempt to “throw” their partners. After all, in this market, everyone knows everything about everyone, news spreads around the community very quickly, and reputation is much more important.
The only thing that actually provides reliable protection from the “kidka” is the REPUTATION of a business angel, venture fund or investment consultant. If a person came to this business for a long time, and hopes to find “his Google” among a multitude of projects, he will not only value his reputation, but also multiply it in every way. And you can increase your reputation by transparency and only by transparency. A venture investor who cares about raising his reputation will be open to the press and “start-up parties” - like Guy Kawasaki , posting his thoughts on a blog , discussing his investments in various start-ups, actively driving to various conferences and speaking there. Venture funds created by large investment structures such as Finam , which has many mutual funds and is completely dependent on public trust, Troika Dialog , which has more than $ 5 billion in management, and also completely dependent on people’s trust and business, Allianz Rosno , one of the largest financial and insurance groups in Europe, will never risk their reputation because of tens or even hundreds of millions of dollars (let's hope that the startups of some of the readers of this article will achieve such capitalization). Maxim Karimov and his partners, working as business angels under the name E-Trust Group since 2003, are also unlikely to spoil their reputation, which has been cultivated for 4 years and cherished even now.
Therefore, the reputation of a venture investor - this is exactly what actually protects the founders of a startup from the “kidka”. And before you run off with your valuable project, laid out in detail in the business plan, to a person or organization that uttered the magic phrase “bring us your project, we are interested,” check their reputation. Look for information about them on the Internet, in the Venture Capitalists Profiles section of the IdeaBlog blog or in the “Dossier” section for venture investors and the reviews of them on the IdeaBlog forum. Ask about them in the section Who knows what about this investor, angel or investment consultant? Forum IdeaBlog or on other sites where startups hang out. Feel free to ask questions to these potential investors - about what projects they invested, whether they can give contacts to startups, with whom everything worked out - especially do not hesitate to ask questions if you didn’t find any information about them, although they asked many people. In the end, they offer you an equal partnership in a joint business, and just as they ask you about what experience you have, where you worked before and what success you have, you have the same right to ask them about it, especially if Google silent as a partisan. I hope that if you have the courage to throw a calm life to the hell and start making your startup, then you have the courage to find out everything about the investor with whom you, perhaps, will implement it.
PS: It should be noted that not all venture capital investors (especially business angels, and not only in our country) can afford transparency. In our former Soviet Union, both a high-ranking official and an oligarch who does not want his business partners to tease him about investing in alchemy, and people who have earned their fortunes in and those who do not want to shine them - such business angels prefer to engage in investing “behind the cover” of networks of business angels, such as Private Capital , the SBAR, or the Association of Private Investors of Ukraine . And in this case, one should pay attention to the reputation of the network, since absolutely all serious networks of business angels are carefully monitored so as not to let business devils to themselves.
The original article is here .
Among startups, whose project is still at the pre-startup stages of its development, this is probably the most frequent question, and it is quite logical: they are required not only to describe the concept of his project in a business plan, but also to give a detailed breakdown of how manner and exactly where he plans to attract the first customers (ie, describe the project launch strategy), who exactly these first customers are, whether he communicated with potential customers, if so, with which, how he plans to conduct a marketing campaign, what are " bottlenecks "in the project and how about novateli startup intend them "embroider", etc., that is, in fact, the founders of a startup investor must present a step by step guidance on the development of its project. Naturally, this raises concerns - what if a business angel, a venture capital fund, or an investment advisor, if you have such detailed guidance and financial resources, simply “throw” the founders of the startup and implement the project?
Projects that are in startup and later stages of development , which already operate on the market and, therefore, no longer hide their idea and business model, which underlie the project, also have concerns - they should detail in their business plan describe what know-how is able to provide them a break from competitors, describe in detail the marketing moves required for successful development, reveal their technical solutions that are a competitive advantage of a startup, etc. Each company considers all this to be its trade secret, and here it is necessary to write everything, explain it and bring it on a silver platter ...
')
And finally, all startups, who, as a rule, do not have administrative resources, large financial resources, or, finally, deep legal knowledge, are interested in one more question: when they develop their start-up, will they not just out of business? Business is legalized, raiding technologies in Russia (and in the same States too - they simply have a more sophisticated legal form) worked out to perfection, and a grated-frayed investor is quite capable, if he has the desire, to easily circle a naive start-up enthusiast his brainchild, around the finger.
At the same time, let's look at the situation through the eyes of an investor: do you suggest that he invest in your belief that the idea and business model that you have invented will bring him a profit? After all, he invests his money (and often it does not matter here, small or considerable) in your project, he either doesn’t know you at all, or knows superficially, and no previous achievements are able to convince him that you are a good guy and will bring him a lot of money . There is only one way to convince him: to show that you have thought through everything in your project down to the smallest detail, that you understand the realities of the market in which you are going to work, clearly understand how and where you will find your first customers, who most likely are what arguments do you have to convince them that they should be your clients, how you will promote the project in the future, whether you have foreseen the scalability of the project, what is your competitive advantage, etc. The investor will ask him to explain every detail that is not very clear to him, will involve experts to verify your conclusions - but he has all the right to do it, this is his money, and you offer him to take the risk.
Nevertheless, there is a problem: start-ups are afraid that their ideas will be stolen, know-how, marketing skills or, in general, when everything is good, they will be thrown out of business, and investors will never invest even a penny in the business that they will not to study in detail. As a rule, investors always answer such questions of startups that, they say, they invest in a team, that the most important thing in a startup is a team that it will be much more expensive and troublesome to find a start-up founding team than to honestly share profits with startups, etc. d. All these words about the team, of course, are correct, but one thing should be clear to everyone: this is not a 100% protection of the founders of a startup from being hit by an investor.
Igor Vlasyuk, President of the Association “Private Investors of Ukraine” : There are business angels who are more properly called business devils. They are looking for attractive patents available to inventors, which they use as the basis for their startup, and select them in order to resell or implement the project on their own. Some business devils invest in projects they like, and then, when the project is developing successfully, they blur the share of the founders of a startup in the company and throw them out of business. These are raiders, and they exist on the market. Those people who constantly “revolve” in this environment - other investors, serial entrepreneurs, who realize not their first or second project, know these business devils and do not do anything with them. However, those startups who do not have such experience, they fall on the hook. Why do business devils throw startups instead of doing business with them? Because they lack 51%, they need 100% of the company, this is their principle.
We have about 40 business angels in the association. It could have been much more, but we are carefully filtering the people who belong to our association in order to prevent such business devils from entering it, because by “throwing” startups who have come to us in association with their projects, they will spoil our reputation, and the business devils will have the reputation of all our members. And the reputation for a real business angel is almost the most important thing he has.
David Tsiteladze, publisher of the Russian version of the magazine for business angels, venture investors and startups “The Angel Investor” : Raiding with respect to start-ups, patents, innovative developments and good business ideas is in Russia. But most business angels have a “code of honor,” and they will never even attempt to “throw” their partners. After all, in this market, everyone knows everything about everyone, news spreads around the community very quickly, and reputation is much more important.
The only thing that actually provides reliable protection from the “kidka” is the REPUTATION of a business angel, venture fund or investment consultant. If a person came to this business for a long time, and hopes to find “his Google” among a multitude of projects, he will not only value his reputation, but also multiply it in every way. And you can increase your reputation by transparency and only by transparency. A venture investor who cares about raising his reputation will be open to the press and “start-up parties” - like Guy Kawasaki , posting his thoughts on a blog , discussing his investments in various start-ups, actively driving to various conferences and speaking there. Venture funds created by large investment structures such as Finam , which has many mutual funds and is completely dependent on public trust, Troika Dialog , which has more than $ 5 billion in management, and also completely dependent on people’s trust and business, Allianz Rosno , one of the largest financial and insurance groups in Europe, will never risk their reputation because of tens or even hundreds of millions of dollars (let's hope that the startups of some of the readers of this article will achieve such capitalization). Maxim Karimov and his partners, working as business angels under the name E-Trust Group since 2003, are also unlikely to spoil their reputation, which has been cultivated for 4 years and cherished even now.
Therefore, the reputation of a venture investor - this is exactly what actually protects the founders of a startup from the “kidka”. And before you run off with your valuable project, laid out in detail in the business plan, to a person or organization that uttered the magic phrase “bring us your project, we are interested,” check their reputation. Look for information about them on the Internet, in the Venture Capitalists Profiles section of the IdeaBlog blog or in the “Dossier” section for venture investors and the reviews of them on the IdeaBlog forum. Ask about them in the section Who knows what about this investor, angel or investment consultant? Forum IdeaBlog or on other sites where startups hang out. Feel free to ask questions to these potential investors - about what projects they invested, whether they can give contacts to startups, with whom everything worked out - especially do not hesitate to ask questions if you didn’t find any information about them, although they asked many people. In the end, they offer you an equal partnership in a joint business, and just as they ask you about what experience you have, where you worked before and what success you have, you have the same right to ask them about it, especially if Google silent as a partisan. I hope that if you have the courage to throw a calm life to the hell and start making your startup, then you have the courage to find out everything about the investor with whom you, perhaps, will implement it.
PS: It should be noted that not all venture capital investors (especially business angels, and not only in our country) can afford transparency. In our former Soviet Union, both a high-ranking official and an oligarch who does not want his business partners to tease him about investing in alchemy, and people who have earned their fortunes in and those who do not want to shine them - such business angels prefer to engage in investing “behind the cover” of networks of business angels, such as Private Capital , the SBAR, or the Association of Private Investors of Ukraine . And in this case, one should pay attention to the reputation of the network, since absolutely all serious networks of business angels are carefully monitored so as not to let business devils to themselves.
The original article is here .
Source: https://habr.com/ru/post/16710/
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