Published On: Fri, May 29th, 2015

Dragon’s Den: Light Entertainment or Heavy Business?

You have to expect any form of entertainment on the TV to be dressed up a bit in order to make it more appealing and watchable to a wider audience and despite the enduring popularity of Dragon’s Den, the program is no different in that respect.

It is often entertaining to see would-be entrepreneurs either flinch or fight their case under the glare of the spotlight, but according to this blog post, even the successful pitches we see on our screens don’t always getting the cash they were promised.

Cash conversion rate

Research carried out by a mobile-phone comparison site, who were rejected themselves in 2009 before even making it to air, found that some 76 of the 153 businesses we have seen shaking hands on a deal throughout 11 series of the show, actually failed to receive any investment at all.

A total of £13 million was pledged by the various dragons that sit in the investment hot seat but in reality, only £5.8 million was actually invested after due diligence and long after the cameras have stopped rolling.

One of the millionaire investors, Deborah Meaden, still considers the conversion rate to be reasonably high and has suggested that in the world of angel investing and without a TV reality show being recorded, the ratio of deals completed is very often likely to be about one in ten, which makes Dragons Den seem quite successful on that basis.

Due diligence

The real sticking point where deals fall down is when due diligence reveals discrepancies in information or other issues that were not disclosed or even misrepresented in some cases.

When accounts and legal documents have been viewed and assessed, if something is seen to be amiss or parties can’t agree on certain points, it will often be the case that the investment is not forthcoming as a result of these problems.

Learning curve

Although Dragons Den is pure light entertainment centered around a serious subject, it can potentially offer entrepreneurs the opportunity to learn how to interact with investors and get a clearer idea of how to structure a deal and what they need to offer to get the money they need.

The TV program makers would not have the time or resources to conduct full due diligence on every applicant who appears on the show, so it is not surprising that some pitches are picked for their entertainment value rather than the brilliance of their idea, which may not stack up under scrutiny.

If you are looking to raise an investment in your business from an angel investor, there are some elements of the show that do at least provide some pointers as to what to expect.

Dragons Den cast photoAttractive to investors

For a business to be considered as investable, there are a number of things that investors would be looking for in a business.

They would want the structure of the company to clearly defined and know how it runs on an operational level.

They would expect you to do your research and know about the background and experience of the dragon you are pitching to and also have complete command of all the requisite facts that they are likely to question you about in relation to your business model and financial performance.

They will also want to know precisely how you are going to spend the money they are investing in your business and how and when it is going to be returned to them, with interest.

Dragons Den is often entertaining to watch and if you are an entrepreneur wanting investment, you can expect the glare of the spotlight even if there are no cameras involved.

Guest Author :

Shirley Robbins is a business coach. She loves writing about her insights and experiences. You can find her articles on many business and marketing websites.

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