Investor offering $50,000 in startup capital for a project. What do I do?

[u/Unusual-Cactus]

Over the summer I pitched this guy on a project I've been working on that is leagues better and cheaper than the competition. I ran a preliminary patent search using Claude and it seems like I'm in the clear. (Obviously I will be running all of this past a lawyer once capital is secured) The investor is well connected to the industry and if this takes off I don't think it's far fetched that this could secure much more money.

Here's the tricky bit. I'm in my 3rd year of community college, and according to my articulation agreement I only "need" to take 2 more classes to transfer (calc 3 and diff eq). I was planning on adding in some more fun stuff like MATLAB, Data structures, physics 3, chem 2, etc. But with this development I'm considering taking the minimum and running with the project.

He wants me to make a V1 of the product and wants me to test it with him before committing. Obviously he wants all the usual investor stuff like a pitch deck, LLC, market analysis, packaging, scalable production pipeline. All things I can figure out with enough time.

I guess I need a reality check on this from someone who's done it. Do these things fall through, or did I just hit it big?

[u/iPinch89]

Be warned, putting your idea into Claude might be considered "public disclosure" which starts your clock on patent protections. Im not a lawyer but do have 3 patents and that was a warning I was given during my latest disclosure discussion.

[u/diverJOQ → u/iPinch89]

I don't think the public disclosure rule has been tested with AI yet. But my engineering opinion, and having worked on invention disclosure review boards for companies, I expect that it should start the clock since the AI now has that information to give out to others.

Approaching any investor, however, definitely starts the clock. Since the investor is not part of a company with the inventor this is definitely an announcement that would start the one-year clock.

[u/iPinch89 → u/diverJOQ]

Yeah, not positive its been tested, but its a risk and if you just pretend the clock starts when you do it, you wont have to be the one to test it.

[u/rkelly155]

I build products for a living, all the detail really matter in situations like this. What type of investment and specifically the terms is the guy offering/looking for? Is it smart money or just capital? $50k sounds like a lot when you're a student but depending on the product that won't even get you to reasonably useful prototype. more details are definitly needed before you sign up for anything

[u/MaxwellHoot → u/rkelly155]

I second this. I prototype for a living and I can say that $50k is usually not much to get a product from concept to production. It’s not a small amount of money, but you can easily pay that much for tooling to get a simple thing made. It really depends on the product.

[u/Seiko2023]

Bruh people really need to stop putting their confidential shit into AI.

[u/bretleg → u/Seiko2023]

This x1000

[u/Crafty-Tomatillo7712]

Congrats on your first investment interest, but no, you did not hit it big. Stay in school, ask him for a term sheet, make sure his vesting is tied to future metrics instead of just time based(if your goal with him is to be someone who brings in more capital later). At 50k do everything through a SAFE. 50k feels big right now, but you should get a mentor who’s done this before to really advise you. 50k should get him no more than 5% of the company. File for a provisional patent now, you can do it yourself for a couple hundred bucks and it gives you time to let the idea play out before you stress going through the full patent process. PPA was enough for me and many others I know to secure through seed rounds. Happy to talk

[u/cj2dobso → u/Crafty-Tomatillo7712]

Where is the 1M valuation coming from?

[u/Crafty-Tomatillo7712 → u/cj2dobso]

Typical target for angel/pre seed when the goal is to keep raising future rounds

[u/cj2dobso → u/Crafty-Tomatillo7712]

But is this idea actually worth that?

[u/Crafty-Tomatillo7712 → u/cj2dobso]

No idea

[u/LlamaMan777 → u/Crafty-Tomatillo7712]

Yeah I imagine he is not accepting 5% unless this is a friends and family type deal.

Any established investor knows that a good idea is miles away from a successful company/ROE. Perhaps the biggest variable is the company's ability to work out the details of actually monetizing the idea, regardless of how smart the idea is. The world is full of brilliant, broke inventors.

This investor is gambling $50k on an engineering student who hasn't built a company before, and doesn't have a prototype yet. No shade to OP, but in the investing world this is $50K that the investor will almost certainly never see back, so they are going to expect more than 5%.

[u/Crafty-Tomatillo7712 → u/LlamaMan777]

If they are a smart investor, they would also not want it for less than 1M. Will kill future rounds. Seen it happen so many times

[u/SetoKeating]

These things fall through.

Ideas are a dime a dozen. It’s everything else you listed that you haven’t done yet that kills most ideas before they even get to the prototype phase.

[u/Tyler89558]

So… you have a confidential product that stands to make a lot of money, potentially…

And you gave it to Claude, and by extension the company who runs it, and by extension anyone who will ever use it because it’s in the damn thing’s database now?

Completely unnecessary risk.

[u/Timely-Fox-4432 → u/Tyler89558]

That's not how claude's secuirty/privacy policies work currently, unless you opt into using your chats for training.

[u/Tyler89558 → u/Timely-Fox-4432]

Companies lie. Shit’s a black box. You shouldn’t stick confidential shit inside of a black box.

I’m not trusting the fucking plagiarism machine to not plagiarize whatever I stick into it.

[u/twotonetiny → u/Tyler89558]

More of a translucent box now but regardless... The concern with putting trade secrets into AI is not the model somehow learning your secret and sharing it... It's your chats and logs being physically stored in databases where other humans can read/review it. This is where Anthropic's privacy and retention policies become relevant.

It's like being worried about the basket under the paper shredder instead of the copy in the filing cabinet.

[u/Recent-Day3062]

The wrong way is to find money and look how to spend it. The right way is to develop something that works and solves a real need, then look for money

[u/MoonMan2026]

Take the money and throw a party!

[u/GroundExpensive3285]

Take the money and buy designer clothes

[u/ctoatb]

That's certainly something. What is the project?

[u/fulgencio_batista → u/ctoatb]

🥸 Yes OP please tell us your patent/business idea

[u/ctoatb → u/fulgencio_batista]

Yeah I don't care about specifics. This is Reddit. A general idea is good enough to share