The investor want access to the sandbox of my software and I have to agree
I've built some technology in the enterprise software space and I have taken it just short of where I can effectively bootstrap. A small number of beta users. I've invested 2 years of my life full time and my partner has worked on it part time for that period. The pitch went really well and the investors seemed "on the edge of their seat." This was my second meeting with them and it lasted 3 hours. At the end they asked me for sandbox access and I said yes but I haven't provided it yet, they also want to meet again in 2 weeks. I am concerned about providing sandbox access with no agreement in place, it opens the door to documenting every interaction in the system and replicating what I have built. Part of the reason I am seeking investment is my fear that a slow roll out opens the door to someone with lots of resources swooping in before I build momentum. I was hoping to get some advice. Should I provide access? If not how should I proceed?
I’m not going to go back and edit my original comment, however, it would be wise to approach your conversation with extreme caution.
And most certainly to not approach it with a hostile tone.
But ultimately, successful investing is not an emotional process. If you’re going to bring an investor on-board who is the type to let their emotions dictate their decision making, it’s at least a yellow-flag if not a red-flag.
Your investor seems like a pro to me, he straight up asked for sandbox access. And the way he cornered you into saying yes, to me this guy comes off as knowing exactly what he’s doing. Therefore, he should be able to understand where you’re coming from.
I also understand how easy it is in the moment to let someone with such perceived value walk all over you like that, but if you are able to hold your ground now, you’ll learn to better protect yourself as your business grows and involves all sorts of sharks trying to get a piece of your pie.
Evidently, you can already see that some people in the comments are already jokingly vying for a piece of your pie. As your pie becomes more valuable, you’ll have all sorts of these characters entering the picture. (Looking over at you u/graiz 😉)
There’s plentiful of investment capital in the world, even in this turbulent environment. Successful ideas however are the rare commodity.
Here’s how you can save yourself with the backtrack.
The next time you able to do so, communicate to the investor that you have sought counsel regarding your Intellectual Property and the nature of your current relationship with the investor.
Given where things stand at the moment, you are more than glad to offer them a guided tour of your platform and entertain any questions that the investor may have.
However, at this point in time, anything further or deeper than that is a liability concern for you. You have no protections in place to protect your property by giving the investor unsupervised access like that.
Also communicate to them that they must surely agree with you as if they had invested in your business, they would not take lightly if you did this type of access agreement with future investors you may bring on down the road.
If this person genuinely wants to invest in your platform and do business with you, they will understand and see where you are coming from and work with you to make a deal happen.
If you get any hint of disappointment or they respond negatively towards your counter-request, you can be rest assured that they must have had nefarious intentions and you just dodged a bullet.
I would treat this a lot like a prospect saying 'just give me a demo'.
Find out why they want access. It's perfectly reasonable to ask this so that you can make sure it's worthwhile for everyone.
If they 'just want to poke around' then you can suggest starting with a screen-share so that you can answer questions in real time, help them interpret things, etc.
If they have more specific questions, then it's a great way to help answer them.
If they have more nefarious ideas in mind, it will become clear very quickly. Just make sure you don't get sucked in and answer questions about how your 'secret sauce' works.
Question asked by
May 10, 2020, 11:45:07 AM
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How much do I have to give my audience so they can pay me something in return? What do they value? what problem do they search for answers on your own? I want to solve that problem.
Brand means name recognition. A lot of people knows what your company does and what you stand for. Brand is result of long campaign of consistent value provision and media cultivation. Brand helps a company reduce marketing cost.
Whether there are buyer willing to pay or not. For that to happen you must provide extreme value. The entire startup process would be based on guess before the validation. Validation happens in a market, not on the street.
Value is what you give customers beyond the price you charge. Value is effective solution to a problem. The price your customer pays reflects whether the problem is big for them and whether your solution is uniquely effective. Value stems from quality and detailed work.
Marketing means bring your product to the market and bring your message to your customer. Marketing is not salesmanship. Marketing is to penetrate the world of commerce through many barriers and existing networks.
Minimally viable business, or MVC, minimally viable company. A company that scrapes by, full of guess and hope and no traction and sales. When you give your customers things for free they all take it. But they never pay and you can never rent a table at the market.
Minimal viable product. A full artifact of a real product. Something that works ALL THE TIME. You can demonstrate the real effect on real people - not to sell hope. The MVP may not have certain non-essential bells and whistles, but it needs to have appeal value.
Customer is king
A business lives at the mercy of its customers. You provide your customers 10 dollars worth of value and they pay you 1 dollar, not knowing that your company only costs 99 cents to provide the item. The value is not the item - the value is what is attached to the item.
Company culture is based on a company making money. Once your workers are paid, they need to have a mission and aspiration so they are not bored everyday and make trouble in the work place.
A company valuation is cash investment divided by the percentage. As long as your story is good, the valuation will keep coming, and the investors will keeping falling into the line.
Return on investment
Investors are either behind family fortune (never work with them) or for rich clients as investment vehicle. Both need returns 2-3 times better than stock market darlings.
Having found what people want, not just what people may need. Your offering and their acceptance is sure, no longer a guess. You can provide it for profit, and you can indeed making living on it. Traction is sometimes called validation. You are no longer a theater. You have touched nature, and found cash vein.