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I have a great idea for a new online service. Because it’s so good, I’m afraid investors that I pitch will just go off and pursue the idea without me. What can I do to protect myself?

During the earliest days of business building, entrepreneurs know they are vulnerable. They’ve heard the stories. Yes, there is competition everywhere, but nothing is worse than thinking your best ideas will be stolen by the very people you turn to for financial support.

I’d like to give you 100% assurance that your business plan won’t circulate among potential industry competitors, but I can’t. It happens.

What I can assure you is active angel club investors and the reputable venture capital funds are not likely to steal your ideas and morph into your main competition. Search regional and national venture capital funds for free.

The over-riding purpose of active investors in the venture finance community is to fund innovative, hard working entrepreneurs like you. They want you to do the heavy lifting. They want you to rise to the challenge of perfecting your business plan, build a loyal customer base and eventually make a lot of money for all shareholders, including you!

Still, it’s smart to be prudent. Here are three recommendations to help you provide balance to your upcoming fundraising campaign:

  1. Perfect your documentation.

    File provisional patents with the United States Patent and Trademark Office (“USPTO”) before circulating executive summaries and business plans to investors either directly or through crowdfunding sites. You can also include a “privileged and confidential” notice on the cover of your business plan. In addition, you can stamp all documents submitted during investor due diligence as “confidential” which might also help protect rights associated with intellectual property filings.
  2. Start with a slow but purposeful reveal.

    Don’t send entire business plans, patent filings or other detailed proprietary information to potential investors before investors ask for them. Start with a detailed executive summary that describes your business purpose and market appetite for your products and services. You can reveal more about your company’s “secret sauce” and strategies as you gain confidence in the genuine interest of the prospective investor.
  3. Research a fund’s portfolio companies.

    Do any of the fund’s portfolio companies have similar technology or market goals as your new business concept? Be wary if they do. Venture capital funds will always be more loyal to their existing portfolio companies.

    Despite your reservations about the venture finance community, there is a far more likely way you can lose your company’s competitive advantage. It’s all about how fast good ideas are copied in the marketplace.

    The best way to protect your company’s first-to-market advantage is to make sure that your company always has enough funds to operate. Then you are best positioned to hire over-qualified employees, lock down your distribution, protect your intellectual property, and consult experienced mentors with been–there–done–that experience.

You can’t let competitive fear to paralyze you. At some point, you have to trust your entrepreneurial instincts and move forward. You can do it.

Do you have a question for Susan? or connect through Twitter @startonpurpose

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