For the last 2-3 weeks we had some sort of arguments and conflicts with my class mates at KTH/Stockholm about when and where to use NDAs. Some of them really believe that; if they have a business idea and plan to start-up on it, before talking to a business angel or a venture capital they should sign the NDA. But some others including me, believe that signing a NDA is not really the best way to protect your idea, furthermore it is not that legal to use it in court.

Last week while i was talking with a venture capitalist in Stockholm, i asked the same question to him and he said; “i never sign that kind of papers, you should trust me. What ever you do, i probably have more lawyers then you do.” Another example about this was a professor from KTH who worked for Stanford Univ. in USA and have been very close to silicon valley, she also said the same; “no one sign that kind of papers in silicon valley”.

All in all; i also believe that signing a NDA means nothing and moreover, ideas are just the 3-5% of the whole business, i can find you 10s of ideas everyday but the most important and the difficult part if execution not the idea.

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For a start up there are a lot to learn. But one of the most important one is understanding why they are exist ? To make money, to make meaning ? I believe, you are nothing more than your customers.

If you think you are starting up for the money. Of course you surely are – you have to survive. But thinking about a business strictly in terms of revenue, profit and cost is a sure recipe for disaster. Peter Drucker, the father of modern management, wrote: “the purpose of business is to create a customer.” Your business is nothing more than your relationship with your customer. Do you educate him about your service? Do you treat him more like a client (under your protection), than you do a wallet full of cash? Do you consistently provide your target audience with outstanding service and products? Most importantly, do you continually strive to know who he /she is? Your number one goal is not to make money; it’s to create and keep a customer. In fact, all great businesses start from this side of the fence.

All in all, if you start up to make meaning for your customers’ life, then of course you will make money.

For a start-up lack of resources is the biggest problem. Sometimes it can be money, network, customer or can be consultancy.The obvious reason for looking for a Business Angel is that, due to the high risk and uncertainty the early company phase conveys, usually no other than business angels are willing to invest. Further, the angel’s network of contacts is an important advantage. Also, the experienced board of directors can refine the company. They can help to companies in these aspects :

Capital in order to hire staff, purchase machines and equipment, and cover upfront costs.

Competence in order to obtain knowledge and skills in how to carry out a specific task.

Contacts in order to obtain a network of people who can help your business in different situations.

Consultation in order to obtain experienced advices.

I believe that when B.A. are dealing with an entrepreneur, they are mainly looking for these; personal relationship, entrepreneur’s enthusiasm and trustworthines, reasonable business plan, potential for the product or service and finally of course for the income.

Business angels can be divided into two different types: active angels and potential angels (Krá ovi &Hyránek, 2005). Refer to the graph above active angels divided into four different groups. For an entrepreneur it is important to know his/her aims and business plans and goals before negotiating with an B.A. For me entrepreneurial B.A. are the best because generally they are coming from an entrepreneurial back ground and they had great network for the specific businesses.

The entrepreneurial angel differs from the other types of angels by having entrepreneurial experience from earlier business, being richer and more active. In addition to the main purpose with their investment which is to get better financial gain on the returns compared to other investments, they also sees informal investing as fun and satisfying.

Last but not least; i strongly advice to entrepreneurs in Sweden to have a look at to these web pages:

EVCA

Swedish Private Equity & Venture Capital Association

CONNECT

REFERENCES :

http://www.connectsverige.se/cldoc/inenglish/96.htm

www.diva-portal.org/diva/getDocument?urn_nbn_se_hj_diva-588-1__fulltext.pdf