Entrepreneurs need to protect proprietary ideas when approaching investors, potential partners, new employees and others. There are two stages to assuring this protection. The first takes place before actually contacting individuals; the second involves having proper legal documentation at the time of the meeting.
Before setting up a meeting with people with whom you will share proprietary information, find out as much as you can about the individuals and their business history.
- Have they financed or partnered with entrepreneurs like you before?
- What is their experience in your particular field?
- Have they, or are they currently working with any of your competitors (this could lead to potential conflicts, both financially and with maintaining confidentiality)?
- What is their net worth, and how much have they lent to others in the past?
- Are there any specific complaints against them regarding breach of confidentiality or funding irregularities?
Entrepreneurs complain that venture capitalists won't take much time to review new concepts and often refuse to sign confidentiality/nondisclosure agreements. When you find this to be the case, proceed with care. If you decide to reveal information anyway, provide only the details it takes to get decisionmakers interested in the overall concepts involved. Use general terms instead of specific ones. Don't send details via e-mail or written communication.
When meeting with potential partners, it’s just as essential to check out their history in advance. Using the general guidelines outlined above, do your best to gauge trustworthiness before setting up a meeting.
When you reveal proprietary intellectual property in any meeting, prepare a comprehensive confidentiality or nondisclosure form in advance. Though you can download general forms of this nature from various legal Web sites, it’s better to consult with an attorney experienced in intellectual property to make sure that your form covers all aspects of your particular industry and type of intellectual property. This will cost more than a simple download, but it will provide maximum protection for your valuable ideas.
Ask all in attendance to sign a copy of the form. If officers of the company will not be present, mail or fax copies of the form for them to sign before the meeting.
Don't be shy about presenting these forms and insisting that they be signed before you disclose any information. In case of noncompliance of privacy (i.e., theft of your ideas), these forms could offer the best proof of what was presented––and when.