Dragons Den v's Real World Investment

[Ozzy]

Just seen a great article by @Mark T Jones published today in the UKBF business guides, the difference between Dragons Den and real life.

I'm a regular viewer, and live tweeter, of Dragons Den. I really do like the show, have met some people who have been on there too and know the stories of what goes on behind the scenes, and how long the pitch really lasts. Few businesses who win investment on the show actually go on to get the investment too, behind the scenes when the cameras stop rolling it really gets serious. (yes I chose the word win rather than secure intentionally).

It got me thinking. I am someone who has gone through the process of meeting private and corporate investors. I've had to sit at a board room table and know my numbers, justify my predictions and sell myself - explaining what I'm also put in both financially and commitment.
Who else here has been on this journey, on either side of the board room table? Have you sat in the chairs with the wads of cash beside you, or have you stood at the front pitching yourself and your business?

 

[John Hemming]

I am probably relatively unique in that many years go I turned down being on the pilot programme for Dragons Den. I have, however, been both in the seat of selling a business and also buying businesses.

 

[Ozzy]

I have, however, been both in the seat of selling a business and also buying businesses.

Which came first, and how'd you find the difference in position?

 

[Mark T Jones]

Thank you for the feedback.

i haven't personally been on the journey, but several of by business connections have - some successfully.

one thing that stands out amongst the successful is the amount of time & energy they put in - seeking investment effectively became a full time job for a period of time.

 

[Ozzy]

seeking investment effectively became a full time job for a period of time

That it does, but one of the biggest shift in mindset I found for me was preparing to go from "my business" to "our business", and being prepared to be challenged on my decisions and thinking.
The first year after my investors came onboard with BDG was the most challenging, a bit like when you first move in with someone else and start finding their annoying little habits ?.

 

[brucegreig]

FWIW, friends of mine who work as professional venture capital investors say that for the deals they do, it is nearly always they, the investor, who is competing to get into the deal, to persuade the founders that they are the best investment partner to go with. Much of their effort is spent hunting for deals and charming the founders, rather than listening to pitches and being charmed.

 

[Mark T Jones]

That it does, but one of the biggest shift in mindset I found for me was preparing to go from "my business" to "our business", and being prepared to be challenged on my decisions and thinking.
The first year after my investors came onboard with BDG was the most challenging, a bit like when you first move in with someone else and start finding their annoying little habits ?.

Yes indeed - It's easy to overlook the fact that you are entering into a relationship, not a transaction.

I've witnessed a slightly different version of the phenomenon, where the excitement of the investment compensates for about 18 months, then the resentment of having to share sets in.

 

[Ozzy]

friends of mine who work as professional venture capital investors say that for the deals they do, it is nearly always they, the investor, who is competing to get into the deal

This is how it worked, somewhat, for me but a few of the investors were quite arrogant (IMHO) about their money. I attended so many meetings, I knew what skills I didn't have and needed to add to a board, and I also wanted an odd number on the board to create the right balance of "votes".
One investor simple said - so do you want my money or not? My reply was no; and I'm glad as I have a great very challenging board now.

the excitement of the investment compensates for about 18 months, then the resentment of having to share sets in.

I've covered this topic at a couple of events when presenting/speaking. I always say don't bother getting investment if it won't make you feel chuffed and proud to hand over a big fat cheque to your investors as a thank you for their investment when you sell. They're also not there to do you job.
When selling a stake in your business you have to do it with your eyes open and on the end goal.

 

[The Byre]

FWIW, friends of mine who work as professional venture capital investors say that for the deals they do, it is nearly always they, the investor, who is competing to get into the deal, to persuade the founders that they are the best investment partner to go with. Much of their effort is spent hunting for deals and charming the founders, rather than listening to pitches and being charmed.

That's probably because they are looking in the wrong places. There are more opportunities for investments now than at any time I have experienced - and I started my first real business in 1979.

Things I stay away from -
Anything online.
Anything with a gateway function like shops or some other marketing structure.
Anything virtual.
Anything with low barriers to entry.
Anything sexy or fashionable.

I like companies that make physical products. It wasn't always like that, but them days is over. We've done the Interweb, we had all the social media BS, we've bought and sold all the fugazi. FaceOff, MyFace, TwitFace and InstaFace have had their days in the sun. Time to return to reality!

So the world is going green - great! Now think what it is that we shall need by the bucket-load if we want to go green! It sure as F ain't another website or some toad-groping franchise!

Our German company has just told me that all new buildings in Germany have to be insulated out of the Ying-Yang and all must have solar power. Similar things are happening all over the world. If that ain't one massive investment opportunity, then I am Mrs. Avagne Goat-Habit of 17, Oil Drum Lane, Neasden.

 

[Ozzy]

I think it depends on your investment strategy and personal motivations. There are still huge opportunities in TwitFace and such likes if your objectives are data, which is also a commodity as much as physical products. I believe none is over the other, just more about what as an investor you can understand from the reports you will get and what you will be motivated and aligned by.

 

[The Byre]

I think it depends on your investment strategy and personal motivations. There are still huge opportunities in TwitFace and such likes if your objectives are data, which is also a commodity as much as physical products. I believe none is over the other, just more about what as an investor you can understand from the reports you will get and what you will be motivated and aligned by.

I agree - but finding opportunities in those segments is getting harder and harder. One is fighting kids with a laptop on one side and giant corporations on the other, with banks out to lunch, dancing naked and printing money right behind.

 

[Deleted member 59730]

I have been a witness to many pitches and I have strong idea that the businesses that last are those who build organically.

I can remember a publisher who started in an office so small that visitors all had to stand up if a new arrival opened the door. One of the partners took their pitch to the Frankfurt Book Fair in a suitcase. Last I heard they had 600 Apple Mac workstations.

 

[Ozzy]

dancing naked and printing money right behind

What kind of parties do you get invited to, and how do I get an invite?

I have been a witness to many pitches and I have strong idea that the businesses that last are those who build organically.

I agree. The risk with so many businesses kept afloat by VC funding and such likes, that are burning cash quicker than Conservative MP can shred a party invite, is what happens when the money runs out? ...because it will run out at some point. They aren't sustainable.
I see this in the FinTech industry currently with many digital banks where the business model is burn money and grab market share hoping one of the Big 5 buy you out before the money runs out.

 

[Mark T Jones]

What kind of parties do you get invited to, and how do I get an invite?

I agree. The risk with so many businesses kept afloat by VC funding and such likes, that are burning cash quicker than Conservative MP can shred a party invite, is what happens when the money runs out? ...because it will run out at some point. They aren't sustainable.
I see this in the FinTech industry currently with many digital banks where the business model is burn money and grab market share hoping one of the Big 5 buy you out before the money runs out.

Dotcom bubble anyone?

I've got an online idea
I've got investment
I've got a Porsche and fancy offices


Oops where has everything gone?

 

[John Hemming]

Which came first, and how'd you find the difference in position?

I first formed a business in 1983. I was involved in investment in various ways from 1990 and I first sold a business (the one I formed in 1983) in 2019.

I would say that the world of corporate finance and investment has a range of participants on both sides of the process. Serious players tend to be in demand whatever side they are on. People with experience easily decide who those are that are not serious.

It is, however, a market.

 

[Deleted member 335660]

Just seen a great article by @Mark T Jones published today in the UKBF business guides, the difference between Dragons Den and real life.

I'm a regular viewer, and live tweeter, of Dragons Den. I really do like the show, have met some people who have been on there too and know the stories of what goes on behind the scenes, and how long the pitch really lasts. Few businesses who win investment on the show actually go on to get the investment too, behind the scenes when the cameras stop rolling it really gets serious. (yes I chose the word win rather than secure intentionally).

It got me thinking. I am someone who has gone through the process of meeting private and corporate investors. I've had to sit at a board room table and know my numbers, justify my predictions and sell myself - explaining what I'm also put in both financially and commitment.
Who else here has been on this journey, on either side of the board room table? Have you sat in the chairs with the wads of cash beside you, or have you stood at the front pitching yourself and your business?

Firstly it’s television so they have to make it entertaining.

One of my students went on it and was turned down because she did not understand the financial aspects if her idea. It was a good lesson to learn.

However a viewer contacted her and gave her the backing she needed. So it was worth the effort.

 

[Ozzy]

Firstly it’s television so they have to make it entertaining.

It does worry me how many people watch shows like this and do think that's what business really is like. A 5 minute chat and you have tens of thousands...

 

[Mark T Jones]

It does worry me how many people watch shows like this and do think that's what business really is like. A 5 minute chat and you have tens of thousands...

It happens a lot with start up loans, too.

It's kind of tragic but funny to hear their tone change when you ask for actual information, or a business plan.

It leaves me wondering - did you really expect someone to hand over cash on the back of 5 minutes of b/s?

 

[Ozzy]

It's kind of tragic but funny to hear their tone change when you ask for actual information, or a business plan.

A few years ago I was on a panel which included a guy from Natwest. To be honest I think it was geared to make the banks look bad for not supporting business, but anyway...

A guy there stood up and had a pop at the chap from Natwest because they had declined a business loan to help him get his business started, the facilitators eyes lit up. Before the guy from Natwest could answer I interrupted and asked the chap what money he was putting into the business and he said he didn't have any. So I asked him if he had offered his home as security for the loan and he said he wasn't prepared to do that.
He didn't like my reply; told him if he wasn't prepared to take any risks why should another company give him money and should all the risk. His response was that banks are supposed to support businesses, I replied pointing out banks are not charities and are a business themselves.

The Natwest guy bought me a drink later that day to say thanks ?.

 

[Mark T Jones]

A few years ago I was on a panel which included a guy from Natwest. To be honest I think it was geared to make the banks look bad for not supporting business, but anyway...

A guy there stood up and had a pop at the chap from Natwest because they had declined a business loan to help him get his business started, the facilitators eyes lit up. Before the guy from Natwest could answer I interrupted and asked the chap what money he was putting into the business and he said he didn't have any. So I asked him if he had offered his home as security for the loan and he said he wasn't prepared to do that.
He didn't like my reply; told him if he wasn't prepared to take any risks why should another company give him money and should all the risk. His response was that banks are supposed to support businesses, I replied pointing out banks are not charities and are a business themselves.

The Natwest guy bought me a drink later that day to say thanks ?.

Well done you for being the one who voiced it! You won't be surprised to know that it's a conversation I have quite often. Not helped at all by TV portrayal of lenders vs poor, down-trodden 'entrepreneurs'.

You may recall the TV coverage of Bank On Dave, where Dave Fishwick, who had made his millions selling commercial vehicles, decided to take on the banks. In fairness, the man himself is no fool, but TV decided to show him going out, hugging local business owners and dishing out cash to those he liked - it made my skin crawl.

Back to the story. Just occasionally in life you get one of those moments when your stars line up, and one of your lines hits bullseye. I can think of 2 of which I'm particularly pleased (over 30 years!)

One was at a rooftop networking event in London (I think it was a business event, but it may have been a party). Some lawyer had decided to dig her fangs into me over her disgust that lenders insist on PGs. I tried to explain the business rationale but she wasn't interested.

Then I simply said 'why on earth would anyone lend to someone who isn't confident they can repay?' The timing was (inadvertently) perfect - one of those moments where the place goes quiet. A general murmuring of agreement, followed by a ripple of applause.

She didn't talk to me again.

The other occasion, in a more select, focused gathering a motor dealer (who should have known better ) came out with the universal, clueless line 'what' your APR?' To which I was able to trot out the well rehearsed response 'I've no idea - what's your MPG?'.

Cue laughter and a mildly irritated motor dealer.

 

[japancool]

OTOH, Mrs Ling's pitch was entertaining.

 

[Mark T Jones]

OTOH, Mrs Ling's pitch was entertaining.

Yip - made for TV!

 

[The Byre]

It does worry me how many people watch shows like this and do think that's what business really is like. A 5 minute chat and you have tens of thousands...

It's never about some magic business plan or a P&L sheet. It's always about people.

So some Joe Blow comes up to you and says that he's going to make a movie and the minimum-in is $1m and he needs $50m total. The film is called 'Dolly Varden'. Do you go for it?

Now Sam Mendes gives you the same pitch for the same film and you've got five minutes to make your mind up - what's your answer?

A poor man comes up to you, shuffling along in worn-out shoes. He tries to bum a few coins for a beer and tells you that his brother-in-law gave him a hot tip for the stock market. It's a silver mine. Do you give him a pound or two and ask for the name of the stock?

Now billionaire investor in silver mines Eric Sprott tells you about his next planned acquisition, Dolly Varden Silver, and thats' all you know. Do you just ignore him or do you buy a few thousand shares at 40 cents each?

The answer to all four pitches is Dolly Varden. But what is your answer?

(I gave my answer two days ago!)

 

[Ozzy]

The answer to all four pitches is Dolly Varden. But what is your answer?

I've just read your post 3 times. Maybe because it's been a long week, or maybe because I was up late at hospital with my daughter as she got rammed through a fence by a horse, but I'm going to need you to break that down for me ??.

It's never about some magic business plan or a P&L sheet. It's always about people.

Having said that, I believe this is to a large part true but not the only factor. The business plan and financials must be credible, otherwise there is no business to invest into.

 

[Mark T Jones]

The answer to all four pitches is Dolly Varden. But what is your answer?

(I gave my answer two days ago!)

Is the answer Business Funding Portal Ltd T/A Fit Out Finance

 

[Mark T Jones]

It's never about some magic business plan or a P&L sheet. It's always about people.

Whilst business plans are often b@ll@x, they can give a great insight to the people and where they are coming from

 

[The Byre]

I'm going to need you to break that down for me ??.

What's to break down - it's a silver mine in Canada.

she got rammed through a fence by a horse,

I need to give her riding lessons. Either that or there's something not quite right with the horse (e.g. saddle pinching).

Is the answer Business Funding Portal Ltd T/A Fit Out Finance

I'll string myself up from a tree before I go into a care home! (I've seen all episodes of The Simpsons, so I know what they are like!)

 

[Ozzy]

I need to give her riding lessons.

Going OT for a moment. My daughter is a freelance riding coach, she was hired by a quite high profile riding school to teach (think Olympic team and Royal connections). The school owners dog was loose, attacked the horse with a child student on it. My daughter tried to protect the child and hold the horse - horse bolted into fence through my daughter.
My daughter is ok, many bruises and dislocated shoulder. Can't work for about a month though, self employed so no income but could have been a damn load worse. Still waiting for someone from the establishment to check in that she's ok....

 

[The Byre]

Sadly, Murphy died last year of old age. He took a dim view of dogs. He also hunted pigs, goats and sheep if they came anywhere near him. Watching Murphy kicking a large and squealing pig was one of life's great pleasures. But Murphy was an instant cure for any dog who thought that it could attack a horse.

When Dexter came here for the first time, he thought that he could have a go at Murphy. I let the two of them run away into the woods - five minutes later and after some distant squeaking, Dexter came back on three legs. Murphy returned with his tail in the air and a look of unbridled triumph.

Dexter has given all horses a wide berth ever since.

But no horse was a mad as Maggie who considered it to be her life's work to kill every cow she saw. She once got into a field with a bull who fancied himself. The bull had to jump the fence and ended up on the road, blocking all traffic and trembling like a leaf, happy to be away from those hooves. Maggie then rounded up the remaining cattle into a corner of the field, kicking them in the head at random intervals.

I like horses that have an attitude problem!

 

[japancool]

But no horse was a mad as Maggie who considered it to be her life's work to kill every cow she saw. She once got into a field with a bull who fancied himself. The bull had to jump the fence and ended up on the road, blocking all traffic and trembling like a leaf, happy to be away from those hooves. Maggie then rounded up the remaining cattle into a corner of the field, kicking them in the head at random intervals.

That's why the coal miners stood no chance.

 

[gpietersz]

It's never about some magic business plan or a P&L sheet. It's always about people.

That is not always a good thing. Take Elizabeth Holmes, for example. She came across as the right sort of person.

 

[Mark T Jones]

That is not always a good thing. Take Elizabeth Holmes, for example. She came across as the right sort of person.

Ah yes, the eternal conundrum - people vs process

 

[SEODEV#338055]

Take Elizabeth Holmes, for example.

Watched that documentary

The concept remains a very good idea

 

[fisicx]

The concept remains a very good idea

Unfortunately technically not possible. Even her own scientists told her that.

 

[JEREMY HAWKE]

These investors/angels are a very different bunch in real life .They are not high profile and they are not searching for any fool with an idea to come through the door
They are on the look out for real business people that know what they are doing and need some capital and expect to return a significant slice !

 

[Lucan Unlordly]

It amazes me that still, after 15 years of Dragons Den, how anyone can go on there without a clue about the figures?
Trumped only by participants on 'Bullseye' where the non dart player, when attempting to hit 101 or more to secure the top prize, have clearly not practiced their throwing technique.

Anyone running business start up courses can have that analogy for free

 

[The Byre]

That is not always a good thing. Take Elizabeth Holmes, for example. She came across as the right sort of person.

Not to me, she didn't!

She had a zero track record of innovative success. When I say 'people' I mean people who have achieved something. The world is filled with numpties who talk a good talk - but my background in the music biz has taught me to ignore the noise and look for the substance.

It reminds me of these fund managers that pop up on YouTube and CNBC and talk up their pet market segment as if they are revealing some great inner truth, be that Bitcoin or lumber futures or whatever it is that they are praying will go up in the next few days and save their bacon by preventing those deadly margin calls.

What the Holmes debacle did show was just how careless and asinine some investors have become. Some sank billions into a product without even having the thing tested. They are calling what they do 'investing' when in reality it is gambling. It's a craps shoot - nothing more!

The US stock market is today 61% of the world's share of publicly traded companies. The US stock market is DOUBLE the size of the US economy. The word 'unsustainable' hardly covers it!

As for this rubbish programme 'Dragon's Den' - it embodies for me everything that is wrong with the business culture in the world today. It's all about deals. "Let's make a deal!"

Business has got nothing to do with deals. Negotiating a deal is like going to the lavatory - something we do in order to function. But it is not business!

You have a business when someone buys something from somebody and pays for it.

If you can do that on a regular basis and turn a profit, you have a business. Until that happens, all you have is fugazi!

 

[tony84]

I have a project I am working on, I have spoken to a couple of people I know who are potentially interested in investing. We are having a meeting in March once I get a little further with it. But the way I have done it is to have a chat, give them a brief overview where I expect to earn money and so on. It was a phone conversation (as we were in lockdown). I am not standing at the front of a room making a pitch, it will be a meeting sat around a table with a discussion.

I have not seen Dragons Den in a while but there is no chance I would do that. I know it is a TV programme but for me it is an investment opportunity, the key word being opportunity. The way some of those people get spoken to, I would not speak to someone I do not like in that way.

You could argue that they are wasting the dragons time by being silly, but that is the researchers job to filter those ones out - but it obviously makes good TV and embarrassing people or bullying them is not for me.