Dragon's Den

If you've been following my blog, you'll have noticed that I've been posting some feedback on the BBC's entrepreneurial show, Dragon's Den. My attention was elsewhere last Friday, so I didn't get around to writing about Episode 4, despite there being a couple of interesting moments.

First though, an update from episode 2. Lee Wood, of Kardoctor, writes in the comments:-

45 minutes in front of them cut down to about 15, but we are absolutely delighted to have been given so much air time for our new business.

The public will decide...no-one else...and so far they are 100% behind us...

The website www.kardocktor.co.uk was launched to conincide with the programme broadcasting and has been more succesful than we thought or hoped for.

As I said at the post-match interview, "kardocktor lives and lives on..."

Nice to think there's a happy ending.

The first interesting pitch in last week's show was from a Yoga teaching network. For a subscription fee, they taught yoga teachers how to make it interesting to kids, and let them use their branding. It sounded like a promising business, and they definitely had plans for the money they needed, but some of the investors were a little sceptical about whether they needed the money. Eventually they turned down a 200K investment for 30% of the company. The offer valued their business at a little under $1 million, but they thought it was worth more.

Takeaways:-

• Everything went well here, the only problem was the valuation. Investors are looking to make money, they will value the business at the time they invest, often the entrepreneurs on this show want an investment based on the potential value in x years time. Their valuations often leave very little room for the investors to make any money, and fail to reflect the risk the investor is taking.

The entertaining pitch for the cucumber top was a good illustration of the theory that investors invest in people as well as products. None of the investors believed in this idea, but one of them did offer to give the entrepreneur a job.

The most interesting part of the show was the pitch for a music site called Mix Album. The guy had developed software to seamlessly mix tracks, and it was a solid protected idea, so there was no problem getting investment of 150K for 40%. There were two offers, but they differed in strategy. One high tech investor reasoned that rather than trying to take a percentage of the music sales market from iTunes and having to deal with all the infrastructure issues and handling small payments, it would be better to try and license the core technology to the existing big boys. The second offer would go with the entrepreneur's plan of building a niche music store for dance music fans. He took the second offer.

As I watched, I felt like it was a mistake. Firstly, because the two investors who made up the second offer had more of a retail/leisure background (and there was two of them) whereas the other came from a single investor with a high risk/high tech background. The idea to sell the technology to existing sites also appealed to me, whereas I wouldn't really be interested in the day to day running of an online music store. As I write now, I'm closer to the fence, but I know for sure I would have gone the other way in the heat of the moment. It's actually a good Micro ISV example, this guy loves music, so he's building himself a nice niche in that industry.

In any case, they've launched, and they have a summary of their Dragon's Den experience up on their website.

In future, I'll only be posting about the show if there's something that really catches my eye.

Tags: tv entrepreneurship dragons den