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Is it ever possible/sensible to sell concept/URL or majority stake at the idea stage?

I have a (very) small business, and one product/service that we launched recently and are steadily growing (an assessment outcome measurement system for children with complex needs that ties in closely to my work as a clinical psychologist). However, I have another idea that I think is really commercial and I can't get it out of my head, although I'm aware I can't do both at the same time. Broadly, it is a website-based service like Just Eat or Groupon or money supermarket but in a field where marketplace reseller sites don't yet exist, with a unique hook. I also have a good name/brand/URLs.

Everyone I've spoken to about my new idea thinks that it has the potential to really take off, and I've had very positive responses to the little pitch I put together from potential investors and advisors. One seed stage investor was particularly keen, two angels loved the idea but wanted me to go back with a working website, one fund manager told me to ditch the rest of my business and jump on it as it has a limited window before someone else will think of something similar and the niche will narrow. And I've had no negative feedback or cautions raised by anyone - despite speaking to several serious business advisors, and many people in my extended network.

I am left with a tough choice:
1) follow my original idea and let the new idea go
2) follow both ideas, but do neither of them justice
3) ditch everything else and follow the new idea

So I started to wonder - is there ever a case in which it would be possible and/or make sense to sell entirely or to become a minority stakeholder at this early stage? I've got the name, URLs, some branding, the concept, an outline of how it would work (including what I believe are the unique hooks to gain market traction), the background for a simple pitch, and some financial projections. The buyer would need to make the website, and spend the money, time and effort populating it. My estimate was that 18 months and ?200k will be needed to get it to a product that is up and running and more than covering its own costs, and ready for a second funding round...

16 Replies

Chris Hote
0
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Chris Hote Advisor
Board Member at FACCNE - French American Chamber of Commerce, New England
Hi Miriam,
As you mention, it seems you already have a team for the "small" business.
What would it take to delegate part of your responsibilities in the "small" business to one of your colleagues? If so, you may focus on your new idea and build a new team around it.
PS: 18 months/200K for a new site seems quite high numbers. How did you get to that estimation?

Shobhit Verma
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Shobhit Verma Entrepreneur • Advisor
building an adaptive recommendation engine
Hi Miriam,
Unfortunately there are already many good ideas out there. However, very few startups succeed at executing those ideas. That is why people do not like to pay for ideas/urls.
If you really believe this could be something big and you do not have the time and energy to execute is, you should *invest* in the idea.
After all what are investors anyways ? They are people who have good understanding of what works in the market, have a good taste for what ideas can make it big, but do not have the time or energy to bring the idea to a company stage. They keep an eye out for entrepreneurs who are coachable and share the same passion and vision for the underlying problem as themselves and when they find such a team, they invest.
By looking for cash incentive upfront, you are yourself selling the idea short. If you believe it can be big, why not go for equity ?
If the reason behind cash and not equity is that you do not believe the new team will be able to execute that idea very well, why should you ask them to pay for the idea when they are going to fail anyways?

If I were you, I would either invest $ in a team or advice them in exchange of very small equity.
Manish Koshal
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Manish Koshal Entrepreneur
Prop. of Second International
Share with me, what you propose to do. May be, it would work for India, equally well.
Sharon McCarthy
4
0
Sharon McCarthy Entrepreneur
Chief Marketing Officer
The most successful entrepreneurs hedge their bets. They don't go full out on their new, big idea; they keep their day job, while they incubate the new business. I'd develop an MVP for the new idea (which really should cost a lot less than $200k), decide in advance how you will know your MVP will be successful, then do both. Once you hit your success benchmark, go full out on the new idea. In the meantime, consider getting a partner now for the first business, so you keep your job as a psychologist, advise the first business, participate in its upside, then win bigger on the new idea. Good luck!
Claus Lehmann
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Claus Lehmann Entrepreneur
Publisher at P2P-Banking.com
Hi Miriam,

I don't think selling the concept&URL will work. Even if you find a buyer you won't get much. The hard step is to get the concept of the ground and develop it into a business.
Therefore if you don't have the time to do this, I don't think it will go anywhere.
If you only lack the money, but can spend some time, consider creating a website with a prototype/MVP and then raise funds through equity crowdfunding, e.g. Seedrs.
Feel free to contact me, if you want to discuss further.
Moti Barkan
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Moti Barkan Entrepreneur
Founder at HackNot
Could you patent your idea given the Alice case? In any case, focusing is extremely critical in the success of a business. Do you think that someone elsecould manage your current business while you work on the new idea? An option is to build value for the new idea by allowing someone to haveatractive share of it.
mario chaves
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mario chaves Advisor
CEO & co-Founder, Avantica Technologies
I agree with a lot of the comments. Selling your new idea probably won't work as it's very unlikely that someone else with money wants to buy other people's ideas. Keeping your current business going while spending time on the new idea seems like the way to go. One last comment, the 200K might be right or it might not be but the 18 months seems like an eternity to me. If you can get the funding, accelerate the spending to get it done much sooner, 6 to 9 months. Good luck!
Miriam Silver
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Miriam Silver Entrepreneur
Consultant Clinical Psychologist / Director, LifePsychol
The ?200k is what I estimated it would take if we built a really good website with all the features and then used six full-time staff to ensure that all the providers wanted to be listed on it. It is the most pessimistic projection of the deepest point of the well before it will bring in sales that cover costs. The estimates are that by 18 months it will make ?15-70k per month of net profit, and be ready for a second round of investment with a decent valuation. If we slow development and populating, we risk competitors springing up before we corner the market. If we go for second stage investment too early then we might undervalue.

BTW "Small" really is small. Current team for the existing project and turning over the normal business that pays us each month is me plus one graduate and a 2 day per week psychologist who is currently on maternity leave. We've just taken on an admin, but we have neither the scope to create capacity in house or fund the new project ourselves. And I'm just one person running things, with a 3-day-per week contract for consulting/training that pays my mortgage.

Seedrs loved the idea, but wanted it to be shown on their site as a working website so that their investors could see it in action. Various angels and fund holders said similar - love the idea, but get it to a working website with a user base and come back to us, then instead of asking for 40-60% of the valuation we'd give it now, you'll be asking for 10-20% of the value we'd give it at that point.

Maybe we do just need to develop the website to show the idea in action - after all, I know a lot of techies and already run a professional community website that gets nearly 10 million page views per year. The difficulty is finding the time, when I'm struggling to keep up as it is (and have young children and home commitments to balance too).
Abdo  Magdy
1
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Abdo Magdy Entrepreneur
Entrepreneur, Storyteller, Group CEO at EGY Enterprises Ltd.
Agree with what had been mentioned on hedging your risks.

Depending on what you intend to do, sometimes there are scripts/open source software that you can used to build your MVP website that would be acceptable to investors.

You can prepare a list of basic features you'd like to have and post a project on freelancing sites and receive bidding on the project. You might not need to invest more than a few hundred bucks to get a website and then stand a better chance with investors.

It makes sense to decide to move from your very small business to the new idea once funding had been secured (You can also tell that to investors).

Examples:
Wordpress with some specialized plugins
Michael Brill
1
0
Michael Brill Entrepreneur
Technology startup exec focused on AI-driven products
+1 on Abdo's comments: don't overestimate the cost developing a site.

Most concepts can be built for <= $5K... sometimes much less. Launch it in 6 weeks, not maybe someday.

Wordpress plugins cover a *lot* of models. There are multiple clone scripts of things like groupon, just eat, etc. Maybe these aren't your strategic platforms but they get you going quickly.

The reality is that 98% of your idea has already been thought of by a large number people, some of whom have actually built products around it. Leverage their work and go conquer the world.
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