I’ve written a business plan and run all the numbers for an idea I have for a unique financial services company, but I’m not the right person to execute some critical aspects of the plan. I need to find a partner who I can work with to get venture capital funding and launch the business. What’s the best route to take? How do I determine the value of the concept so I can figure out how much to ask of in return for 50% ownership?
I recommend you speak to a SCORE advisor. There are some additional resources available at the Small Business Administration.
SCORE advisors are typically very friendly, and very helpful. The organization will typically have regular meetings covering various topics such as financing, which of course is one of the primary problems a small business has to face.
Honestly, the value of the concept is very close to zero. Value comes from all the scut work in putting the business together and getting it running, which you apparently don’t want to do. I’m not trying to flame you, but it’s extremely unlikely that anyone out there will say “yeah, that’s a great idea, I’ll pay you money up front and do the fund raising and launch the business and if it succeeds, you can have half.”
That is true. I know some venture capitalists. In addition to your concept, you will need to pony up some massive blood, sweat, and tears to go with it. They partner with people that are willing to do everything to build a successful business yet don’t have access to the raw capital to make it happen. You have to supply everything else and make it an almost Kamikaze mission for them to be interested.
Lots of people have great ideas for books. Only the ones that spend years of research, toil, and heartache writing and perfecting one succeed and even then they may not. It is the same way with business.
I guess I wasn’t clear. I’m not looking for someone to pay me for my business plan and let me walk away. However, my business contains elements which are outside my area of expertise, so I’m looking to partner with someone who has the skills I lack (and lacks the skills I have). The workload would be split 50/50.
As for the value of the business plan, assume that I’m different from everyone else and have actually created something lucrative. It seems to me that if I’ve truly devised something particularly unique that my idea and hard work spent working out the execution should have some value. For example, if I’d invented a particularly useful device, the patent would be valuable even if I’d never produced or sold a single item. If I’m wrong, I’m wrong, but I think it’s a reasonable question.
I didn’t get that sense from your question. But any way, what exactly are you looking for this partner to do?
I’m not saying that most ideas are not lucrative. My point is that usually most of the value comes from translating the idea into a working product.
It’s true that occasionally somebody comes up with a truly unique and wonderful business plan. However, this is so rare that it will be very difficult for you to get anyone to listen to your pitch, let alone sign a nondisclosure agreement first.
But in any event, the question: what exactly are you looking for from your potential partner? This will inform how you find him or her.
Regardless of the uniqueness or value of the idea, I’m curious why would it be difficult to get someone to sign a non-disclosre agreement?
I’m looking for a partner with business and financial experience. I have the technical expertise to execute most of the plan, but I think I’d benefit from having a more experience person “lead” the actual operation of the company. Again, I’m not looking for someone to do the heavy lifting for me. I could do 90% of the required work to launch the business, but I think the remaining 10% (venture capital presentations, financial management, etc.) are too important for me to try and wing it. I don’t want to perfectly execute the nuts-and-bolts aspects and then falter when it comes to finding capital allowing a competitor to replicate my plan.
The problem is that anytime you sign such an agreement, you are increasing the risk that somebody will accuse you of stealing their idea and take you to court. Given that the vast majority of ideas are worthless or near worthless for reasons explained before, there is very little upside to signing such a document.
If you are unwilling to hire somebody with expertise (and something tells me that you aren’t interested in fronting cash), I would advise you to wing it.
First, you are unlikely to find a partner who will give your idea the value believe it deserves in figuring out who will contribute what. Even if it’s a great idea, people have a tendency discount other people’s ideas. It’s the “not invented here” syndrome.
Second, there is a good chance that any partner who does get involved will demand an extremely one-sided deal. The person may even screw you in the end.
Last, I wouldn’t worry too much that your inexperience will give potential competitors lead time. Until other people actually see the idea in action (and see it making money), they will believe it’s a lousy idea that could never work. Again, the “not invented here” syndrome.
So, I would suggest you read a few books, take a class or whatever, and then jump in.
You might do better with a business advisor/consultant. They have the expertise but you have to pay for the advise. I know a couple and they are really good. One is a CPA turned consultant and the other is an MBA/lawyer.
They are expensive. The ones I know charge $400 - $500 dollars an hour but it would probably be way cheaper in the end for you to do the work and let an expert direct you on the parts that you do not know how to do. That might be enough to get you started with some venture capital and from there you just hire knowledgeable employees. No business founder has expertise in all areas. A large part of being a good one is hiring the right people.