We are a pre-revenue start-up. We've recently been given the opportunity to be introduced to the CEO of a major player in our space. Our goal would be to get some funding and potentially find areas to partner on. That company will certainly have not have heard of us at this point. Is there any danger in letting them know about us and our ideas? We have patents pending but not sure if that is worth much.
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Yes, there is a danger. They have every reason to bury you. The first way I would try would not be by buying you out, either. Think about it...Why would they help you? It's better to kill you now while you are weak. Dead companies don't enforce/litigate patents. How would I do that? File a ton of prior art and other arguments for invalidations of your patents now. Even though the arguments might be questionable, they know you will not have the cash for lawyers to defend yourself. Absolutely there is a danger, specially if the larger competitor is aggressive in their dealings with third parties (think Apple for example). Call the CEO and tell them there must be a mistake, you're in the textile business, not in the same industry as them. See, for this kind of stuff a startup DOES need an MBA-type. Some info about these costs: |
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Be very careful, I was involved in a joint venture with two larger partners, and all was well for a while, until the other two used their strength and funds to push the smaller partner out. If you don't have a position of strength run away. Ask yourself what you might do if you were in the their position |
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You are correct that patent pending does not mean squat in the immediate scope of things. If they are software patents, even if granted, they will likely mean the same. Behold the great filter known as litigation. It sounds like you are looking to get under the wing of another successful company, in order to enter your industry and receive funding. That is a terminally stupid idea, you may as well just arrive and ask to fill out a job application. Consider partnerships only once funded. The time you save by ditching the meeting can be better spent re-working how you pitch ideas to investors. I don't mean to be blunt and abrasive, what you are describing tells us that we need to get your attention quickly :) |
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Yes, that could be dangerous. Should you do it or not; well, that depends. Generally, when you approach professional pure investors such as venture capitalists then you are protected in 2 ways:
When you approach a company that is working in your space, or an entrepreneur in your space, then you are not protected in a similar way. The CEO will have a pretty good understanding of his market, if you just give him some good hints about what you're planning, then he may very well be able to guess the rest from his market understanding and 'parallel evolution'. I have seen people get badly burned by something similar; approaching an entrepreneur in their space for advice, and then seeing that entrepreneur build and market something very similar to their product idea.
Hmn, doesn't sound like strong reasons to me. Funding? You typically don't get that from competitors. Areas to partner on -- well, maybe, but that works best when you already have a strong market position. I like Jason's answer a lot. I have seen people get burned by this, so my experience tells me to be very cautious. Best of luck with your decision, OP. |
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Patents are useless if this is a software company. Even if not, people can always compete without stepping on patents. If you're at all successful, they'll find out about you anyway. And although you'll be "first," they'll still have far more money and attention than you have, so competition is always possible. Therefore, go. Surely you can talk about what you're up to without revealing Top Secret Information. If you can't, how will you tell your customers what you do? Surely you can discuss enough to know whether further talks at a deeper level are worthwhile. If not, you've given up nothing. If so, you're making a calculated risk. |
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