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angel investors, nicking ideas?

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hello,

Brand new to this forum and i will share a concern i have with you and see if there is a solution.

I recently posted elsewhere looking for angel investors for my company and have been getting 2 enquiries per day.

The problem i have is that i dont want to give away my concept from end to end in case it gets nicked.

FYI - i asked for 20k for 10% of business, this money is needed to cover printing, admin, web costs and allowing me to quit my job - for 20k the investor can expect to earn from £50k to £100k each year - i think this is conservative.

Year 1 will produce only a slightly smaller turnover than all subsequent years and as such i have had lots of angel investors wanting to meet me (done through a website). I have actually withdrawn the proposal as i keep getting emails and dont know how to proceed.

My question (eventually) is how can i approach investors knowing that they cannot nick my idea? or do i just have to trust them? if there is no way to protect myself whilst i have an alternative way i could raise the money (i want the investment to get everything i need to do done)

FYI - once established company will be almost impossible to replicate and would reasonably expect to turnover £5 million per year - profit margins i am not 100% on but i worked out something over 40% - so based on 20% the investor would get 100k per year.


Look forward to hearing the wisdom
 
extremeld said:
hello,

Brand new to this forum and i will share a concern i have with you and see if there is a solution.

I recently posted elsewhere looking for angel investors for my company and have been getting 2 enquiries per day.

The problem i have is that i dont want to give away my concept from end to end in case it gets nicked.

FYI - i asked for 20k for 10% of business, this money is needed to cover printing, admin, web costs and allowing me to quit my job - for 20k the investor can expect to earn from £50k to £100k each year - i think this is conservative.

Year 1 will produce only a slightly smaller turnover than all subsequent years and as such i have had lots of angel investors wanting to meet me (done through a website). I have actually withdrawn the proposal as i keep getting emails and dont know how to proceed.

My question (eventually) is how can i approach investors knowing that they cannot nick my idea? or do i just have to trust them? if there is no way to protect myself whilst i have an alternative way i could raise the money (i want the investment to get everything i need to do done)

FYI - once established company will be almost impossible to replicate and would reasonably expect to turnover £5 million per year - profit margins i am not 100% on but i worked out something over 40% - so based on 20% the investor would get 100k per year.


Look forward to hearing the wisdom
Click to expand...
You invest £20,000 and get a return of 25 times (£500,000)?

Seems to good to be true especially considering the £20k is for:
- printing
- admin costs
- web costs
- small salary for you

Covering the printing costs is that for marketing ro what the business involves?
 
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Didnt say 500k

its good but not that good,

i was being bombarded with potential investors - i just want to know how i can seek investment without risking having the idea nicked.

its not something i can patent etc

I am loathe to elaborate as that would make a mockery of this thread!

thanks
 
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noidea said:
You invest £20,000 and get a return of 25 times (£500,000)?
Click to expand...

Don't think so. £100k a year based on 20% profit margin and 10% stakeholding.

Extremeld, I don't know the answer to your question, you could probably write up a confidentiality agreement but if the idea is that good they could probably find a way around it anyway.

Can't you raise the 20k elsewhere? For such a small amount (in the scheme of things) it seems crazy to give away 10%. Have you tried for a business loan? Maybe personal loans, credit cards, family/friends?
 
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extremeld said:
Didnt say 500k

its good but not that good,

i was being bombarded with potential investors - i just want to know how i can seek investment without risking having the idea nicked.

its not something i can patent etc

I am loathe to elaborate as that would make a mockery of this thread!

thanks
Click to expand...
for 20k the investor can expect to earn from £50k to £100k each year
Click to expand...

would reasonably expect to turnover £5 million per year
Click to expand...

I can't see you turning over £5 million a year until the 5th year at least, you didn't specify a limit to an ROI and £100k times 5 years is in fact £500,000 which is 25 times the initial investment.
 
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Bank loan seems the best idea,

i am looking for investors as i have no access to money.

Didnt realise that you worked out your return over 5 year period, is that a normal thing to do?

£5 million is reasonable - all the figures i produced for the angels on my proposal were conservative.

Halving what i think they would actually achieve.

I think i will go and see the bank.

its a bit of chicken and egg situation if i have the 20k the bank would want to lend to me but without it they probably wont. Reason is what the 20k would help me do.

anyway i think i am going to skip internet angel networks altogether, try bank first then find get confidentiality agreement drawn up and approach individuals in person.

i cannot pitch!
 
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extremeld said:
Bank loan seems the best idea,

i am looking for investors as i have no access to money.

Didnt realise that you worked out your return over 5 year period, is that a normal thing to do?

£5 million is reasonable - all the figures i produced for the angels on my proposal were conservative.

Halving what i think they would actually achieve.

I think i will go and see the bank.

its a bit of chicken and egg situation if i have the 20k the bank would want to lend to me but without it they probably wont. Reason is what the 20k would help me do.

anyway i think i am going to skip internet angel networks altogether, try bank first then find get confidentiality agreement drawn up and approach individuals in person.

i cannot pitch!
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£20k isn't much.

Apply for a SFLG (small firms loan guarantee) loan...

You can get up to £250,000 - so £20k would be rather easy to obtain.

I would recommend you to consider raising that £20k up to £40k if you can justify it and afford the repayments.
 
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First call patent office .If not protected as soon as it hits the market and is a good idea.

your stuffed.

Earl
 
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Okay sorry for being blunt and to the point.

Investors obviously want to think the idea ,concept is going to work. Much more chance of getting money if you have launched and proved that is going to work.

Investors also want to invest in the person as they are critical to the future of the business.

You have just asked for £20k and offered very, very high returns.

I would suggest that anybody with anything about them could raise or earn £20k without the need for investment so that raises a huge ?

The return does not stack up, way to ambitious, which again ? judgement and ability.

I need to state this as I see so many people on here looking for investors. They should be the last port of call after you have used every bit of your gile and ability to raise money from other means. Even then they are only suitable for a small range of businesses.

I am stating this from the business owners point of view;) not as an investor as I have been know to dabble:rolleyes:
 
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You need to work in parallel. Maybe your business can reach £5 million turnover as a business without competitors. When you start adding competitors to a service you can't protect against many more will open and want a slice of that pie so-to-speak.

Some competitors will be small jokes, but in most markets there is usually 2 main (sometimes 3) dominant players offering the same or similar products or services.
 
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adventurelife said:
Okay sorry for being blunt and to the point.

Investors obviously want to think the idea ,concept is going to work. Much more chance of getting money if you have launched and proved that is going to work.

Investors also want to invest in the person as they are critical to the future of the business.

You have just asked for £20k and offered very, very high returns.

I would suggest that anybody with anything about them could raise or earn £20k without the need for investment so that raises a huge ?

The return does not stack up, way to ambitious, which again ? judgement and ability.

I need to state this as I see so many people on here looking for investors. They should be the last port of call after you have used every bit of your gile and ability to raise money from other means. Even then they are only suitable for a small range of businesses.

I am stating this from the business owners point of view;) not as an investor as I have been know to dabble:rolleyes:
Click to expand...


Perhaps you have jumped to your answer without reading what i have written, i posted a proposal to angel network and got 11 investors wanting to contact me in 5 days. The concept is going to work i revealed it in my proposal and the result was 11 contacts in 5 days.

I havent asked anyone for 20k (on this forum at least)

Anybody cannot raise 20k you may be in that position but i am not, i was also under the impression that by getting an investment i would be raising 20k

The return clearly has stacked up, as professional investors have been contacting me - you cannot possibly state that a return does not add up without knowing the details, that is ludicrous, you may think its unlikely but then again that would just be based on the odds, whether those odds are 10-1, 1000-1 or 1,000,000 -1 all i have to be is the 1

I am NOT on here looking for investors, i am on here to get advice on how to protect my concept from being nicked by investors - once i know how to do that i will get an investor -

i had to hide my proposal as i was getting 2 new angels contacting me each day.

The concept is such that as soon as this works the company will almost straight away be at maximum capacity.
 
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Five million is a big number

If you can earn and physically count and bank £13K a day from day one I take my hat off to you!

Hope it all goes swimmingly
 
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FYI - i asked for 20k for 10% of business, this money is needed to cover printing, admin, web costs and allowing me to quit my job - for 20k the investor can expect to earn from £50k to £100k each year - i think this is conservative.

Sorry if you took it the wrong way or I misunderstood? . I thought the statement above meant that you were asking for £20k from potential investors( I know not on here as you have had many offers from elsewhere)

Therefore my points still stand

£20k can be raised without investors
Returns look very high. Sorry very, very , very high.

In answer to your main point of " how do I protect my idea "

You have to take legal advise and if it is able to be patented that has to be done. If it is not well then you have to except that you are going to get competition but good legal advise and documentation should ensure that does not come from the long list of investors you have wanting to give you money when you sign one up.

I am not being negative here but I would have serious concerns over someone who cannot raise £20k from other means than investors. Also from your point of view if the product/service is so good and profitable why would you want to give away a chunk for the sake of £20k? It does not stack up.
 
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Loosing 1/10th of your company for such a small amount seems stupid...

You are getting so much interest because the return is so big.

You need to create the terms:
- Is the 10% for security until the return has been recouped or is it ongoing?
- If you don't specify the term... they could be seeking £100k for the next hundred years if your business survives that long (when they die it will still be ongoing to the estate)
 
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i take the point that i have probably offered to high a % in my proposal.

as far as raising 20k goes, everyone has different circumstances and i know what is and what isnt possible for me from conventional routes.

Returns are very high, its a good idea and i will probably offer a lesser % from now on. (thank you)

I want to have a partner in the company i am not hugely concerned about them taking 10% for ever, although i will probably ask for a little more cash to start.

This has been useful and i appreciate all the points.
 
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extremeld said:
for 20k the investor can expect to earn from £50k to £100k each year - i think this is conservative.
Click to expand...
As a word of advice, one of the phrases you should never use when presenting to real investors is "these forecasts are conservative". Almost always, this signifies that the entrepreneur is a little wet behind the ears. Let investors draw their own conclusions about your numbers.
 
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thanks,

i am not looking for an investor on this forum, i felt the need to say it, based on previous comments about the returns being naive.

I know i cannot tell investors what to think.
 
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extremeld said:
Perhaps you have jumped to your answer without reading what i have written, i posted a proposal to angel network and got 11 investors wanting to contact me in 5 days. The concept is going to work i revealed it in my proposal and the result was 11 contacts in 5 days.

I havent asked anyone for 20k (on this forum at least)

Anybody cannot raise 20k you may be in that position but i am not, i was also under the impression that by getting an investment i would be raising 20k

The return clearly has stacked up, as professional investors have been contacting me - you cannot possibly state that a return does not add up without knowing the details, that is ludicrous, you may think its unlikely but then again that would just be based on the odds, whether those odds are 10-1, 1000-1 or 1,000,000 -1 all i have to be is the 1

I am NOT on here looking for investors, i am on here to get advice on how to protect my concept from being nicked by investors - once i know how to do that i will get an investor -

i had to hide my proposal as i was getting 2 new angels contacting me each day.

The concept is such that as soon as this works the company will almost straight away be at maximum capacity.
Click to expand...

If you fully revealed it I am afraid you have already lost it.:)

The hook is the huge return you are offering.

I duobt that you have revealed it or you would not be on here asking how to deal with angels.

Earl
 
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extremeld said:
i take the point that i have probably offered to high a % in my proposal.

as far as raising 20k goes, everyone has different circumstances and i know what is and what isnt possible for me from conventional routes.

Returns are very high, its a good idea and i will probably offer a lesser % from now on. (thank you)

I want to have a partner in the company i am not hugely concerned about them taking 10% for ever, although i will probably ask for a little more cash to start.

This has been useful and i appreciate all the points.
Click to expand...
If you offered a smaller percentage, say 2% then they won't be interested!!

If you enter a partnership then it be 50/50 not 90% - 10%

keep full ownership, as a limited company and go get a loan for the business...
 
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Another word of warning, how many of these replies came via disposable email adis?

We tend to discount many emails that repute to come from companies using disposable emails, most are dubious at best - people keeping tabs on competitors/trying to get info for free rather than doing work themselves.

Have you looked into business grants, rather than having to give up a % of the company?
 
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As Earl said, if you have already disclosed the plan and I am guessing to more than the 11 who showed interest, it might now be to late. Was it fully disclosed on the site that you posted on even before contact with the investor?

Is there anyway you can make the pitch without disclosing some key details but providing enough info to dangle the carrot?

I agree with you that it is not always easy for some people to raise 20k as some believe on here. If the business does not have history, you have little funds yourself, nothing to secure lending against etc. then it will be hard to get your hands on the cash.

Can you not start off smaller in the very first instance with the business plan in place to roll it out on a bigger scale very quickly if it does take off. Once you have a small bit of trading history and it shows large potential then funding might become easier.

If you pm me with full details on the business with intended customer base, any phone numbers/contact details of all people that might come in handy I will see if I can be a bit more helpful.;)JOKE
 
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extremeld said:
cant be patented its a service not a product
Click to expand...

I think if it is a service that is offering that high a return then as soon as its launched at least a dozen others will start up doing the exact same thing but with a lot more financial backup behind them. As far as I am aware you cannot protect a service industry from being copied. Because of that very thing I think the profit margins would start to reduce over the years so you could remain competitive.

Regards
Gary
 
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There is no answer to your problem... there is a very high chance of someone stealing your idea if it’s as great as you say… after all why have 10% when you can have it all!!!.

Equally there are very few people, if any, that would take a punt on 20K for 10% of a new business that they knew nothing about... regardless of your commitment and belief in the concept…

Who’s to say that you’re not misguided… or just a dreamer.

Also I can’t see many investors wanting to invest money to pay you a wage either.

Even if your income projections are correct… As sir earl said it sounds as if you need no special skills to produce this service so the second it hits the markets you’ll create this supposed new market and within minutes you’ll have more competition than you can shake a stick at… This will make your projections redundant.

Don’t get me wrong I genuinely hope you get this off the ground, but investors (including banks) tend not to have blind confidence in anything.

Good luck
 
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hi,

in my opinion the best thing to do is speak to an actual person/team of people who can promote your idea. i deal with angels (real life in the flesh, meet up for drinks etc - not a web based person) and the people i deal with are not interested in nicking your idea and doing it themselves as they have their own stuff going on. they realise they cannot possibly do it all and would much rather leave someone else in charge running it, while they reap some reward for their investment.

just be careful who you give your information to. make sure its a real life person but you will have to give over a certain amount of info to get them interested. for example if you contacted me i would ask yo ua whole load of questions which would involve you telling me it all. if you're paranoid about me nicking your idea then i'll tell you how to copyright it, but rest assured i have absolutely no will to steal other people's ideas - my plan is to set up a consultancy and advise people like you on start ups and loads of other services so i'm one stop business shop. the reason i'd have to ask you loads of questions is coz the angels will ask me. its my reputation on the line and i don't want to lose faith with them as they are a lifeline to my clients.

anyway, pm me if you want more info. if not then no worries but like i say the best thing you can do is get someone in real life that you can approach.
 
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spigwell said:
As far as I am aware you cannot protect a service industry from being copied. Because of that very thing I think the profit margins would start to reduce over the years so you could remain competitive.
Click to expand...
Sorry Gary, when I started writing my post this morning, I was distracted (how dare work get in the way) and didn't return to it until now, so I hadn't seen your post...

Sorry for not quoting your genius J
 
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peebles said:
hi,

in my opinion the best thing to do is speak to an actual person/team of people who can promote your idea. i deal with angels (real life in the flesh, meet up for drinks etc - not a web based person) and the people i deal with are not interested in nicking your idea and doing it themselves as they have their own stuff going on. they realise they cannot possibly do it all and would much rather leave someone else in charge running it, while they reap some reward for their investment.
Click to expand...

I wouldn't be so sure, if it's a concept that needs no skill then why have 10% when you could easily do it yourself (or find a synergy with another company in your portfolio), I don't agree with you.

Don't get me wrong not all investors will shaft you, but there is absolutely no way of knowing, regardless of whether they are in the flesh or otherwise.

If you want an investor you have to take a gamble it’s as simple as that, no bit of paper is going to save your idea… you just have to hope and pray that they’re trustworthy… personally if I was that convinced about the returns I’d beg borrow and steal but I wouldn’t tell a complete stranger my idea…
 
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ok,

i think i am going to visit the chamber of commerce today and see what they can do, i dont want to be passing information to people via the internet


Thanks
 
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noidea said:
If you offered a smaller percentage, say 2% then they won't be interested!!

If you enter a partnership then it be 50/50 not 90% - 10%

keep full ownership, as a limited company and go get a loan for the business...
Click to expand...


I am aware that a standard partnership agreement assumes 50 / 50 but this can be changed!

I dont want to work as a one man ltd company.

I would not get a loan.
 
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extremeld said:
I am aware that a standard partnership agreement assumes 50 / 50 but this can be changed!

I dont want to work as a one man ltd company.

I would not get a loan.
Click to expand...
A limited liability partnership with 2 people is 50 / 50 - not that I know much about LLP so if I am wrong someone please correct me.

Protect yourself with an NDA.

Why won't you get a loan? Even if you have CCJ's, bad credit history, a £20k SFLG loan would probably still be achievable!!

Not having a loan and offering a percentage is crazy. it makes it seem like you think you can't afford the repayments... so I don't know how you claim to award an investor with up to £100,000 a year...
 
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thanks for all the replies, i am looking at the sflg scheme and think i will apply using that.


I am 100% that partnership agreements assume 50 / 50 unless otherwise stated - therefore it would be necesarry to amend the standard document.

the sflg scheme seems like a real prospect, thanks

k
 
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extremeld said:
thanks for all the replies, i am looking at the sflg scheme and think i will apply using that.


I am 100% that partnership agreements assume 50 / 50 unless otherwise stated - therefore it would be necesarry to amend the standard document.

the sflg scheme seems like a real prospect, thanks

k
Click to expand...
Good luck. I can't see you getting turned down for £20k I think you have a great chance.
 
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FYI - i asked for 20k for 10% of business, this money is needed to cover printing, admin, web costs and allowing me to quit my job - for 20k the investor can expect to earn from £50k to £100k each year - i think this is conservative

ExtremeLD, I'm curious but a tad concerned also. Can appreciate you don't want to give too much away but may I ask prod for a bit more to go on with some questions? -

(1) Presumably, as of today, you have some personal ongoing weekly/monthly or perhaps longer-term financial liabilities and/or creditors to pay? I would think you're highly unlikely to attract any angel if they feel part of their investment is being used to replace your income.

(2) If (hypothetically) you found your ideal investor or partner and they deposited £20k in your account on Monday morning. What would be your very first action in order to make money? (so aside from speaking to printers or web developers etc)

(3) As many have already said £20k isn't that much in the scheme of things. Is there a family property (yours or parents) you could secure against?

(4) Does your current job bear any relation to the business you're contemplating?

Good luck - best advice don't trust anyone. NN
 
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