Help. Someone wants to invest on my Idea

I have a business idea which has revenue potential and is untapped so far.
It is innovative and has no parallel as of now.
It will take some time for them to realize the potential and may need huge initial investments at several phases.

How should i negotiate with the investor?
He has shown interest in knowing the idea in detail.

What should i ask in return?
I want to own small percentage of the firm instead of lumsum money for the idea.

Should i ask in written their commitment before divulging my idea in total?
Would welcome your suggestions.
link dev

 

Honestly, the best thing you can do is contact a lawyer. I wouldn't attempt to do such a thing on my own, especially when it comes to writing up a contract.

 

First you need a cofidential agreement. Forgot exact name but it basicaly says that the person can not use any of your idea or tell anyone about it.

Basic idea from a patent. Next spell out terms exactly before any deal and i would do this before showing idea.

Write contract that sates you get so much percent of earnings. The person funds the costs for developement in exchange for control of so much of the idea.

You could ask that if the person stops any developement you get full rights back. I do not know if that will fly but why not ask.

I would also state that any sale of the product or service would entitle you to either same percent in new company or percent fo sale. You could alos state you have right to buy idea back for same price as any offer it you want.

Basicaly cover your bases before showing any idea and make terms clear and legal.

 

Get an NDA before you tell the investor ANY details.

 

Thank you for quick responses.
I will be meeting a representative from the group next week.

Can i writeup a confidential aggreement on a word document and seek his signature before divulging my idea?
If he likes the idea, then we can go for details such as percentage split in the company/product and all other terms before going into explicit details of the idea.

I would also like to seek a low paying position in the course of product dvelopment like an advisor or technical architect etc.
This way, there will be little scope for the investors to cheat me.

Does this sound ok?

link dev

 

Find a NDA template / free legal form and use that.

 

Thank you. I will find that template and proceed.
link dev

 

ooo yes, where is this business deal to take place, make sure your all in the same country and the laws apply!

 

I am in NH, USA but the deal is happening in India and from my state.
I will be talking to them through one of their representative here. If they like the idea and my presentation, they will go ahead.
Hope to see nice outcome.

 

Venture capitalists generally settle for 20-30% of the profits from an idea, focus on making payback in 3-5 years after which they divest by selling out their shares. So if you're looking for a "small percentage" you may wanna reconsider, because you're selling yourself VERY short. At the very least you should retain majority. Of course, it all depends on how desperate you are and what else they bring to the table (research/production facilities, angel management etc) but do keep in mind that it's YOUR idea, so don't sell yourself short. And yes, make sure you get an NDA signed first thing you do, before going any further with discussions. If they're genuinely interested and professional they should make zero fuss about it, it's pretty much standard procedure.

 

A non-disclosure is can be very hard to enforce when you are talking about dealings in another country. If you are serious about protecting your rights, you should pay for an attorney. Doing it yourself will likely give you little to no protection. The track record and reputation of potential investors is the single most important factor in choosing a partner. What are you going to do if they tell the idea to someone else that registers an entity in another country and then claim they came up with the idea and cut you completely out of the deal? It could be virtually impossible to prove they stole your idea.

 

That is a good point.
How about registering a domain and put up an abstract of my Idea?
This way i will not only have the proof along with the timestamp, but also somthing as a proof , if things go out of control.

I agree, i will have to trust these guys to some extent and cover my bases as much as possible.

Also, the fact that, stealing just an idea may not fetch them all. Most important things is how to make money out of it, impementation of it etc are also crucial. If these are the people who are bent on shorting me out after getting my idea, then at best they are short sighted people and can't go too far with my idea.

Best regards
link dev

 

Go to the marketplace and place your offer there. You might be able to find someone who is interested.

 

I have someone talking to me about the idea.

Here is my question.

The investor wants to fund upto $250K for a year.
This will help us get started and show the idea in working.

Once we get this off the ground and get few customers, we want to go for bigger funding for making it big.

The person who is funding us with $250K is not a professional investor. He is just someone from our family/friends loop.

How should i talk about percentage ownership? If not percentage ownership, what will be his stake?
Iam not spending a penny on it except helping realize the idea and help them in understand how to make money out of it.

Any ideas?
There is no doubt, we need much bigger money than $250K, if we want to spread.
Thanks

 

You should contact a lawyer in your country... It is better that you explain it in front of your lawyer and keep it recorded..

 

That sounds scary - and exciting! Definately look into getting some legal advice, and actually get together and talk with a lawyer - don't just take the advice from a public forum.

 

Getting some information off of public forum will definitely help. I will definitely get some help from lawyer and see what he advices.

Nothing is certain at this time, but talks are progressing well.
If anybody has gone through this path before and help me with their experiences, that would be great.
looking forward to your opinion.........
link dev

 

Watch out because come people are just snooping and trying to get ideas and will leave you hanging in the dry while cashing in on your ideas and plans.

 

Best way to turn friends into enemies, get them to invest money into your ventures.