Due diligence when bringing on partner

FutureGuy

Hi all,
I'm relatively new to the the entrepreneurial world as a full-time endeavour.

As a person, I know my strengths (one of them being being able to churn out ideas/inventions) and and I know my weakness (execution).

I have a number of opportunities fleshed out and I know they will not get off the ground due to a limited understanding of the technical side of the execution. I remember reading a similar story to mine and it was suggested to bring in a partner who can execute your ideas as 50/50 is better than 0/0.

I come from a background where I grew up in an extended family where "trust" and "business" never seemed to go hand in hand. A family was taken advantage of a number of times and I think it has made me wary.

I'm nervous I will find someone who will take my idea and just run with it themselves. Is there a way to protect the idea prior to agree with someone to come on board?

Apologies if I am sounding overcautious.

Gloomtastic!

If you patent the ideas, through a separate company, then they would be in your name and you could licence them to the working company.

But, what if your partner improves the idea? Who owns it then?

You can think about it for the next few years or you can just bite the bullet and do it. How about a family member?

FutureGuy

Gloomtastic! wrote: »

If you patent the ideas, through a separate company, then they would be in your name and you could licence them to the working company.

But, what if your partner improves the idea? Who owns it then?

You can think about it for the next few years or you can just bite the bullet and do it. How about a family member?

My current project is something I feel is not patentable. In fact, there is a company in the space with a similar product but I have two Unique Selling points that differentiate my offering from theirs.

I was thinking of actually presenting out the idea to that company and then striking a seal where I would receive %X of sales - they would already have the brand name, production capabilities (a very similar product) and delivery infrastructure.

I could theoretically do a great deal of the work myself as a one-man operation but could never scale it.

Gloomtastic!

FutureGuy wrote: »

My current project is something I feel is not patentable. In fact, there is a company in the space with a similar product but I have two Unique Selling points that differentiate my offering from theirs.

I was thinking of actually presenting out the idea to that company and then striking a seal where I would receive %X of sales - they would already have the brand name, production capabilities (a very similar product) and delivery infrastructure.

I could theoretically do a great deal of the work myself as a one-man operation but could never scale it.

Are they a big company?

y0ssar1an22

If you have a partner in mind, could you introduce a non compete clause into the partnership agreement?

FutureGuy

y0ssar1an22 wrote: »

If you have a partner in mind, could you introduce a non compete clause into the partnership agreement?

It's a good idea and I'll put some research into it.

ironclaw

As a person, I know my strengths (one of them being being able to churn out ideas/inventions) and and I know my weakness (execution).

Just as some feedback, you are not a valuable member of a partnership. Everyone has ideas, and I mean everyone and they are rarely unique. But most people cannot build or execute ideas, which are two very different things and are more valuable. A person can have a so-so idea but if they can execute it well, they will do better than the groundbreaking idea that can't gain traction.

You say you have limited understanding of the technical side of the execution which is fine, but do you have the deep industry knowledge to counter that? The reason being is that your idea may simply not be possible, already done or have no market. Have you thoroughly vetted your idea?

You mentioned you have just started, do you have an actual product or service? Or is it all on paper and in the ether? Most importantly, have you made any sales or do you have investors? If you don't, this is a huge block to many partners as it usually means they need to stump up some cash and if you can't match that, you'll lose equity fast.

The reason I ask about the product stage is that any partner discussion will revolve around getting your idea to the next stage. If you have an idea on paper, you are going to be on the back foot unless you bring something else to the table i.e. Deep industry knowledge, contacts, capital etc. Simply asking someone to go 50/50 on an idea is unlikely to work out as they'll be doing the lion share of the work in most instances.

Lastly on non compete clauses, they are difficult to enforce especially if the work product is leaked or copied by a body outside of your jurisdiction, for example, if you made physical goods and China started making them too. I would also advise not approaching an existing competitor unless they are agreeable to a non-compete or similar, otherwise, you are blindly trusting them not to steal your product.

All of that probably sounds incredible negative but I don't wish it to come across that way. It's simply a Q&A I've had both as a person seeking, vetting and advising on partnerships.