How to Protect Your Business Idea When Pitching To Investors

The unfortunate story of how one @ndegwapower had his business idea stolen when he shared it with a prominent CEO has been doing the rounds on Twitter.

With a ballooning population and soaring unemployment rates, the youth in Kenya who form the majority of our labour force have been forced to innovate to survive, sometimes hoping on entrepreneurial bandwagons such as the quail eggs boom in order to make ends meet.

Startup culture is in its prime in Kenya, evident with the myriad of incubation spaces offering mentorship to growing businesses and conferences that encourage you to take the horse by its reins and determine your own economic future.

That said, how do you share your concept to get constructive feedback on its feasibility without you having the rug pulled from underneath you when that person runs off with your idea?

You can sign a Non Disclosure Agreement(NDA). Before going off to meet with a potential investor or mentor, you can have a lawyer draft a basic NDA that will ensure your idea is not shared or implemented anyway else. The disadvantage of this idea is of course that one, most investors do not agree to sign these agreements and two, should they sign it, there is still the risk of them choosing not to honour it and stealing your idea anyway. In this case, you need to have the legal fees to file a lawsuit and burn through your very limited financial resources. Read more on that here.

 

Stealing ideas. Image from https://www.cleverism.com/prevent-people-stealing-idea-ndas/

Do not reveal too much and keep things succinct during the initial meetings. Save the details for future meetings when rapport and trust has been gained with your potential investor.

Apply for a patent or trademark. A patent will give you exclusive rights to your invention preventing anyone from replicating your idea while a trademark will distinguish your product from another enterprise. Both can be challenged in court should they be infringed upon. The downside to this, however, is that copyright and intellectual property laws are still under developed and  the application process for patents is fraught with red tape.

Do your research and know who your investor is.The good thing is, the internet hides nothing and often, if they have a penchant for underhandedness when doing business, then it will show up on a Google page. Knowing who you are planning to associate with can help you dodge a very painful bullet and help you decide whether the risk of revealing your idea to them is worth taking.

Leave a paper trail. Keep a record of every stage of your business journey and the growth of your concept and if possible, a log of the conversations when you have meetings with your investors. This will serve as evidence in court should it get to that stage and you have to prove that you were in fact, the original owner of your business.

Mficha uchi hazai, this is a Kiswahili proverb that cautions against not sharing your idea out of fear of its theft as this might inhibit your growth as an entrepreneur due to lack of feedback that could help you scale and avoid pitfalls along the way.  The best thing is to work on ways to make sure to the chances

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