Posts Tagged ‘Dragons’ Den BBC2’

Well last night we had another varied range of pitches, including one for £2.5m investment to develop an environmentally friendly car.

As always, there were a bundle of learning points. Here are my key learning points for this week.

Be careful about what you plug

The first person we saw who was looking for investment in his company that helped people write and publish their life stories was plugging being ethical as one of the key things that made the company different.  It was clear that this did not sit well with all of the Dragons’.

Persuasion matters

Unless you can positively influence you are never going to be able to move the other party closer to your point of view.

Be careful not to give mixed messages

The chap from Anyway who got investment for inserts in aerosols and spray products got investment.  Yet he could have so easily blown it.  A good example was when he said to Theo that if he (Theo) called the MD of Proctor and Gamble, he would get to speak to him whilst he personally had been struggling. 

A few minutes later he was quibbling about the two Dragons’ wanting a 40% stake when he was offering 5%.

He clearly did a good job at negotiating a deal at 20% but as he already had indicated himself, the reputation and contacts would make a huge difference. 

Being clear about what matters most helps reduce the risk of giving mixed messages.

Be grounded and realistic

The chap seeking £2.5m of investment was clearly very bright and had a brilliant track record.  Trouble was the Dragons’ exposed some real flaws about his ability to get his eco friendly car produced and to market for £10m.

The most telling point was when asked about marketing the finished product.  His budget estimate was £500,000 whilst the Dragons’ stated that a marketing campaign for a new car was likely to be in the region of £20m.

The big learning from this bold pitch was that you always need to go back to basics, do your research and not let your heart rule your head.

So what learning points did you notice from this week’s episode?  I invite you to leave a comment to add your perspectives and insights.

Well we saw a range of different pitches in the Den last night from shoes to cleaning materials to an online recipe community.  As always, there was a lot of learning points.

Nerves

Nerves can either get in the way or drive us on.  The first lady who secured investment was nervous but she held her nerve despite some intense scrutiny. By contrast another business owner who was offering wine in a sealed plastic glass seemed overcome by nerves.

Pricing matters

The issue of pricing comes up week after week.  Price too high and you run the risk of being viewed as unrealistic.  Price too low and you probably have a business model that is not attractive to an investor.  I am sure pricing is an area that challenges most businesses.

Don’t over value your business

While there are many variations and models out there for valuing a business, what is clear is that it is important to do a sense check.  I am sure that if more businesses that were seeking funding from the Dragons’ stood back and asked themselves if the valuation made sense, there would be a greater probability of investment.

Be willing to engage in a sensible negotiation

Last night we saw a common situation where a business (the infection busting cleaning products) is growing, knows that the help of a Dragon could make a huge difference but was inflexible when it came to negotiations.

You need to demonstrate your belief that you will deliver

The infection busting cleaning products business was a classic example of this.  The business wanted to give the investor a 5% stake, had clear growth profit targets and was willing to offer a 10% stake. 

 James Caan made an offer for all of the money but for a 30% stake.  He did however, offer to return 10% back to the owner if the promised profit targets were met. 

Essentially he was offering a risk sharing agreement.  You deliver what you said you can and I will reduce my stake.  The business owner for whatever reason decided not to accept the offer.

If you want someone else to risk their money you need to be willing to show that you will take some risk.

So what did you learn from this weeks Dragons’ Den?  Leave your comments with your insights.