I received this question in e-mail today:
I am in the processes of developing a small business around what I have been told is a great idea by friends, family and SCORE. I am very near the manufacturing stage, which obviously requires venture capital and the manufacturing process. I’d like to present my idea to anyone that is interested. I would appreciate your interest and thoughts.
I get that question a lot, so I want to share my answer:
- You don’t own your idea. Your idea has no intrinsic value. Building a business on it gives it value.
- Plan. Figure out how much money you really need, based on a plan you can defend when asked. It’s a matter of startup expenses, assets, and how much time it takes to get to monthly cash flow break-even. Sure, it’s all guesswork, but make it an educated guess that you can explain in detail. Don’t ask for more or less than what your plan says you need.
- Large companies don’t buy ideas. I don’t see that suggestion in your e-mail, so I assume you’ve already figured that out. It’s important for others.
- You don’t want just any investor. Choose an investor like you would choose a spouse.
- More on finding investors: Don’t ask people if they’re interested; ask them whom they know who might be.
- Aside from your SCORE counselor, you can also ask at your local Small Business Development Center. Find a local angel group.
- Don’t rule out bootstrapping. See point two, though, and consider what your startup sweet spot is.
- Look for partners with experience in your area. People you can trust who’ve been down this path.
- Look for an attorney with real, verified small-business experience. Forget the stereotypes. There are lots of honest competent attorneys around. Get recommendations
- Don’t forget the five hard realities about selling an invention.
And I’m assuming a lot of these answers are not what you would have hoped for. I’m sorry for that. A lot of people will give you detailed advice and step-by-step instructions that don’t actually work. It’s better to go into it knowing what you’re up against.