The Age Old Entrepreneur-VC Paranoia Question
from the new-generation-of-entrepreneurs dept
More evidence that startups are back in fashion: we're seeing a repeat of articles about the startup process that were published during the bubble years. It seems that every new generation of entrepreneurs has to find out how things work yet again -- so the old stories are resuscitated with new actors filling all the usual roles. The Boston Globe is running the ever-popular "how secretive should you be with your business plan in pitching VCs?" story. This article was probably written and published twenty or so times in the mid-to-late nineties. While this one includes the story of how Sidestep pitched some VCs who later went on to found competitor Kayak, the example case five years ago was UrbanFetch being created after an investor heard Kozmo's pitch and figured he could do a better job. Of course, VCs who actually do take someone else's idea are being pretty stupid -- because word gets around (such as in articles like this one, where VC firm General Catalyst is accused of poaching Sidestep's ideas) and it makes it more difficult for them to get the good deals in the future. Venture capital is a reputation business -- and jeopardizing the reputation over a single investment is a bad bet. However, in the long run, this issue is a silly one. If you have a good idea, keeping it secret is never going to be the answer. It may make sense initially, as you sort out some of the details, but if it's a good idea there's always going to be competition -- and the real trick is how well you can compete in the market, not in how well you hide your business plan.
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VC and secrecy
I actually have two business plans in my files, both for online somethings. One was pitched to VCs (and got about $100 million in funding), the other is the EXACT (down to typos) same business plan for a company started by a 'resident entrepreneur' at a VC.
So business plans get stolen all the time. I would suggest to anyone reading this that if someone reading your business plan can just clone it, then there is not much of a barrier to entry to your business and you are pretty much screwed anyway. Just take the VC money and have fun with it while it lasts, and make sure to pay yourself a nice high salary.
And don't stress if it tanks, since you will have plenty of VC driven opportunities in the aftermath.
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Execution is Key
-Clouser
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Re: Execution is Key
Thanks for the help.
Joe Spinoso 813-597-4666
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