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I guess this was inevitable. Two things are always meant to collide — a startup journalist and a television show about startups.
Dragons’ Den is a reality television show that features entrepreneurs from various sectors pitching their business ideas with the hopes of securing funding from a panel of venture capitalists (the dragons). The British version of the show is currently headed into its 11th season and somehow the products just keep getting more bizarre.
After watching close to 10 seasons of this show, there are few things that keep recurring that I think startups could take notice of — not just when pitching, but also when doing business. There are many things that can be learnt from the show but we have managed to narrow it down to nine lessons that we thought always seem to pop up when the entrepreneurs engage the dragons.
Sometimes adults behave like children
Somehow when entrepreneurs face the dragons they lose all sense of control and revert to being kids. Telling the dragons about your childhood and how you witnessed someone being beaten by a cop and a dog and how you became passionate about making garden furniture because of that event… Really. What is your point?
Entrepreneurs like to get playful in the den and then get petulant about knowing what they are doing when they are caught off guard with a question. Bad idea startups. Try to play it cool and keep your inner child (and your childhood story with very little to no value your pitch) inside.
Also try not to dress like an idiot when you pitch and don’t sidestep questions.
You have to be willing to risk everything
Entrepreneurs walk into the den knowing what they want and the kind of dragon they want to help them grow their business. They are willing to risk investment to get the right VC to show interest. It seems stupid at first when you’re asking for money. But, it’s actually worth it for the right kind of investment.
If an investor wants to take an extra five percent of your business to give you expertise that you cannot get anywhere else, take it. In the Dragons’ Den it is much more worth it to get someone with industry experience and contacts than to just get the money. It’s actually quite smart. Success is always more likely when you have the right people on your side.
Know everything there is to know about your business
I am quite impressed at the calmness displayed by the investors sometimes. Too many entrepreneurs walk into the den not knowing some very basic things about the business they supposedly founded. Answering basic questions should be the main thing any entrepreneur should be ready to answer when pitching.
If you can’t answer how many subscribers your business has but claim there are many, how exactly is an investor supposed to trust that you can actually run a business?
Startups, know everything about your business before you tell people about it… especially people who want to put their hard-earned money into it.
Even a bad pitch can get some cash
In a world where things hardly go the way people plan and everything that could go wrong will, a bad pitch is almost a given.
Dragons’ Den proves that no matter how bad your pitch is and how inept you may seem as a business person, if you have the right product that has the potential to succeed, a dragon or two will invest in your business.
It just goes to show you that pitching isn’t everything, but your business may be.
Don’t argue with an investor
I am really surprised that no one on Dragons’ Den hasn’t actually thrown things around and gotten really violent.
This show is ripe for a Jerry Springer version, seriously. The amount of entrepreneurs that spend most of their time in the den arguing with the dragons is mind-boggling and the dragons that join in their tennis match of arguments are even worse. Again, adults behaving like children.
Do not argue with an investor that has all the money without cause. You think you are right? Prove it, don’t result petulance. If you do, they will lose interest.
Your job when you pitch is to get them to believe in your business not show them how difficult you are to work with.
Stick to your guns but please don’t be stupid
It’s always good to see entrepreneurs who don’t whore themselves out for a buck. I have seen some fairly decent startups walk out of the den with no money simply because the deal they were getting was pretty much screwing them over.
However, those kinds of situations are a dime a dozen. Somehow entrepreneurs seem to think they know exactly what they want so they turn down perfectly legitimate deals just because they feel they can get better and end up with nothing.
Don’t be stupid. If you are offered a full amount for 30% based on your projections and told that if your projections are met, which you have guaranteed, that it will drop to 25% (the stake you originally offered), take it. Especially when you are getting expertise with it.
Put on a show as long as you know what you are doing
Pitching with flare is awesome. You have to make an impression that the dragons will remember for a long time. But if all your flare is in a dramatised pitch and you have no skill left for business, then we have a problem.
If you get them intrigued with a pitch and let them down with the business part of it then let’s face it, you aren’t getting any money. So let the pitch match the business knowledge. It has to make business sense and be primed to make loads of money. Can you do that? Can you show how you are going to do that?
Pay attention and you might leave with more than money
If you come into the den pitching a business that makes no money and is in fact losing money and you have other businesses that you are also currently involved in but they also barely make any money, there is a problem. The dragons don’t take kindly to anything that appears to show a lack of focus.
Sometimes the dragons will see the potential in your business but not the way you want to do it. So listen up and get some free advice even if you don’t get any money.
Don’t just go throwing numbers around
I am starting a dessert business. It doesn’t exist yet and I have valued it at US$300-million. Stop throwing numbers around that can’t be backed up. This is a big thing in the den — entrepreneurs love spouting big numbers.
Valuations so inflated in businesses that have no revenue stream or any real projected financials. Get your numbers in reality.