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One of the most common questions I get asked by other business owners is whether getting investment from Dragons through Dragons’ Den guarantees success, and whether the experience is as daunting as it appears.
So, here’s my experience.
Honestly, I never applied to the show, and I never would have done, for several reasons.Firstly, my own lack of confidence and secondly because we weren’t desperate for the money. We’d started an eco-gift packaging online business but at the time my ex-business partner, Robin had applied for the show, without telling me may I add we hadn’t begun trading.
He thought he was doing a good thing, as he’d realised fairly early on that radio was his passion far more than packaging, but not wanting to let me down, he thought he would find me new business partners.
A surprise call from the BBC one morning, asking me what we wanted the potential investment for, left me raising eyebrows across the office as Robin mouthed “Blag it, I’ll tell you after.”So, I did.We needed stock, new premises, or at least that’s what I told the BBC researcher!
Before I really understood what was happening, we were sent for screen tests in London and then asked for a full business plan. The business plan was easy – numbers are my comfort zone.Being in front of the camera much less my comfort zone.Somehow, we passed all stages though and suddenly we had a film date in May 2008 at Pinewood studios.
We arrived at the studios at 7am on the day of filming and went straight into hair and makeup.We were then placed in the Green Room with all the other entrepreneurs being filmed that day and told to wait. We waited all day.At 5pm our BBC runner told us that filming had overrun and that we were to go home.We would be called back.
Relief was mixed with frustration on the way home, along with doubts as to whether we’d actually get a call back.But a week later we were back in hair and makeup and back in the Green Room…waiting.
We waited all day again, and then finally, last of the day, we were called into the Den.We walked in to 5 unsmiling faces and were met with no pleasantries.Straight into the pitch. Robin, the professional presenter suddenly got hit with nerves and the first clip aired by the BBC is me looking at him puzzled, wondering why he was struggling to speak!
The pitch did not go well.The viewer sees 10 minutes tops.We were actually in the Den close on 2 and a half hours, and it was brutal. Duncan Bannatyne was particularly brutal accusing me of being on a crusade, was told the business idea was pathetic and that his young daughter could make better products.What no-one showed on air was that Duncan had sat picking the box throughout our presentation so of course the paper was going to peel off.
Half an hour into the pitch, I thought we had completely blown it.We didn’t have anything that the Dragons look for – we had nothing patentable or design protected, we had no trading history and very few barriers to entry.Anyone with a vague idea of how to run a website could easily set up as a competitor.By this point we had been trading 5 months and had proven the concept, but we had no protection for our fledgling start-up.
In hindsight it sounds ridiculous, but because I thought we had no chance of getting investment, I had never thought of what the reality of taking investment would look like, and what impact it would have on us.So, when Peter Jones and Theo Paphitis proposed that they would like to invest, I was so shocked, I didn’t know how to respond (insert my puzzled face from earlier.) They offered £60k for 40% of the business. We accepted on the spot.
The BBC crew commented afterwards that entrepreneurs who are successful are normally very pleased and that I didn’t look ecstatic. That’s because I was still trying to work out how it had happened!
What many people don’t realise is that whilst the Dragons may agree to invest on camera, this is only a provisional yes and subject to lengthy due diligence. Either the dragons, or I could pull out at any stage before completion.
I’m often asked how long the Dragons are involved. Very rarely is the investment in any form of loan.It’s like shares in any other company and therefore the dragons are involved until an exit strategy is agreed, often in the form of selling the company on, or the original entrepreneurs buying the dragons out at a later stage.
The upside of being successful on the show is that you have an 8–10-minute free marketing pitch in front of an initial audience of 4 million viewers.More than could ever be achieved without a huge advertising budget.I couldn’t think of a better way to showcase your business in the UK whilst not having a huge budget behind you.
However, it’s a risky strategy.The editing of those 2 ½ hours in the den is down to the BBC who are, after all, making TV and therefore things will be edited for “entertainment” purposes.You have no say therefore on how you are going to come across, and if the dragons hate your product or service, it could be an uphill struggle post airing to gain credibility from other potential investors.
Neither does investment from the dragons mean instant success or a sudden opening of that “little black book” of contacts.
After our pitch was filmed, we were invited to a meeting with Peter’s and Theo’s teams, to talk about the way forward. It was decided at the end of the meeting that the Dragons were going to forward me the money and leave me to run the business with little interference.This was honoured on both sides.
Last valuation of Tiny Box Company was £15m.Their return on initial £60k investment, if we were to sell? 9,900%.And that doesn’t include the annual dividends.Of course, that assumes we could find a buyer willing to pay that amount, and whilst gulping at the ROI, bear in mind that of 10 investments the dragons make, 9 are statistically likely to fail.
Would I do Dragons Den again? Yes, but I would go in having done a lot more research and making sure I was confident in my company valuation first. It’s also important to go in knowing what you expect the Dragons to bring to the table… after all, you’re looking for a partnership.