It’s a good question and it’s one I am often asked. The pitches that you see on the Den can last anywhere from 10 minutes to an hour. During that time we ask many questions as we listen to the entrepreneurs pitch us their stories and work to persuade any, some, or all of us to invest in them and their businesses. After my 8 seasons on the show, I know just how hard it is to deliver these high-pressure pitches, even for the most seasoned entrepreneurs. It’s never easy to stand in front of investors and ask for money, let alone to do so on a television set facing a dozen cameras, a TV crew, and 5 Dragons elevated on a stage. But many entrepreneurs are successful on set and advance to the next stage of our early agreement. The handshake is, just like in many business deals, the beginning of the journey.
Being successful on Dragons’ Den is a wonderful boost to any business, but the hard work has just begun for the entrepreneur
After the show we begin a process known as due diligence. Even if a deal interests one of the Dragons, it’s important to remember that we do all of our legwork after the show. In my case, I have a team of people who go to work to collect, gather and distill the granular detail we cannot access during taping in order to help us better understand the full picture. We look at financial statements and partnership agreements, review patents and trademarks, talk to customers, do market research on the industry and learn more about the entrepreneur. There’s a longer list than that, but fair to say it’s a detailed process that helps me feel more confident about the money and resources I am being asked to invest in the entrepreneur and their business.
It is a generally accepted reality that about one in ten deals moves forward to the investment stage after a VC company has finalized their due diligence process. Many things can go wrong in that process or circumstances simply change. Sometimes entrepreneurs can back down when they face the legal agreements and when the enormity of a partnership becomes a daunting reality. Others back out because they may want to renegotiate after the show or their business takes off and they feel they no longer need the investment. I sometimes back out of deals because, after examining the business in detail, I realize that it’s not a good fit – for any number of reasons. Or I worry that the entrepreneur may not be able to manage the growth and deal with the challenging trajectory and complex realities of running a business. There are many valid reasons for one or both parties to not want to continue. Sometimes it’s simply an intuition that the two of us are not going to be good business partners, even though on the show it felt promising.
Even after we strike a deal, some of the businesses fail. There are many challenges once the ink has dried. Being successful on Dragons’ Den is a wonderful boost to any business, but the hard work has just begun for the entrepreneur. They have to go back to the day-to-day reality of building a business and working hard to capitalize on the tremendous promotional boost that accompanies an appearance on a hit TV show. I rely heavily on the entrepreneur to run the business while I provide as much support and resources to them as is appropriate for the size of the investment. At the end of the day, however, money alone will not make a business partnership or a business itself successful.
Partnering with a Dragon can be a wonderful way to help get your business growing. I have had some real success with partners in OMG’s Candy, Dr. Joey’s Skinny Chews, Love Child Organics, 3D Multihorse, Urban Cultivator, Balzac’s and Carbon Farmer, to name just a few. These entrepreneurs have been able to grow and build their businesses not simply because of the incremental value that my team and I have added, but more due to their ability to be resilient, face rejection and find innovative solutions to stubborn roadblocks.
I am proud of the many deals that I have done – and while they have not all turned out as well as we always hope for, I have a great and abiding respect for every one of the entrepreneurs I have worked with.
Photo: Marayna Dickinson