SUMMARY
Share the information in a phased manner
If the investor agrees to explore more details, share your pitch deck/ IM with important but but not intricate details
If you are at the idea stage, we can’t really debate on sharing the information with or without signing a term-sheet
As a seed capital enabler, I’ve come across these questions many times:
- How do I believe that you won’t steal my startup idea and execute it?
- Do you sign an NDA before exploring my idea?
- You meet so many people- what if my strategies/ data reach my competitors through the leakages?
Questions like these pose trust issues in founders who lack confidence in sharing their startup idea and believe that the entry barriers are too tiny to protect them. Being on both sides of the table, all I can say is that you shouldn’t feel insecure about sharing your ideas. And this just doesn’t apply on sharing the information with VCs but anyone whom you think is a potential partner, customer, mentor, investor, team member and so on.
Did you ask why?
Because until you make your startup idea work, it’s worth nothing more than a thought in your head. You can’t run away sharing the essential information with your prospective stakeholders for the simple reason of respecting their time.
You may, however, share the information in a phased manner with the investors as below.
Phase 1: Breaking the Ice
Start with sharing a well-drafted email covering things like What, Why, Who and How of your startup idea. This is the phase where you clearly ask the investor whether s/he would want to explore it further from the perspective of investing into your idea. You need a lot of patience and occasional follow-ups at this stage as the investors keep busy with their businesses.
Phase 2: Building Interest
If the investor agrees to explore more details around your startu idea, share your pitch deck/ IM with important but not intricate details. For the early stage folks- since you won’t have much traction/ metrics to show, focus more on the slides covering the below things:
- Your Problem statement and solution,
- competitive landscape,
- monetisation,
- go-to-market strategy,
- founding team and
- fundraise i.e. ask & use of money.
Important: You don’t have to share your in-depth financial projections or “the secret sauce” until asked for. The chances are that you’ll never arrive at that stage with most of the folks.
Phase 3: Opening It Up
If things proceed and go well to the stage where a meeting or detailed call is scheduled, that’s where you need to be a bit thoughtful about the privacy but hey, a serious investor with a good reputation would not have time to execute your startup idea or find someone as passionate as you to do the same. By this time, you should also have some idea about their working and communication style.
If things seem fine, trust your gut and don’t delay things which break the communication channel. I strongly believe that the angel investors deserve to know your idea and execution strategies in details as they take big bets with their money at a stage when no one else cares whether you’re building the next Google or Apple.
If you are at the idea stage, we can’t really debate on sharing the information with or without signing a term-sheet- it doesn’t matter at the idea stage in my humble opinion.
To conclude, the chances are thin that the investors (or anyone for that matter) will go behind your startup idea and have time, passion and energy to execute the way you can. Ideas are immaterial without confidence and persistence for execution.
