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 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.
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.
Since 2006 I’ve worked with in excess of 6,000 accountants and professionals in workshops, seminars and one to one helping them land their next jobs and become better leaders, presenters and business partners. Before that I spent 25 years in accountancy climbing the career ladder from Payments Clerk to FD. I’m a CIMA Fellow, Certified Professional Coach and Team Coach Facilitator.