I love Dragons’ Den. There, I said it. I know some business folk are a dismissive of the show because it can glamourise the investment process and potentially mislead around the rigor involved in securing funding – but I just love it! You can also accuse the show of sensationalising some of the issues which could literally make or break a young business but we’re all adults here so surely we know what we’re letting ourselves in for?
There are many reasons to love The Den and if it is used correctly it can be the perfect platform to propel a small business to the next level which is a fantastic gift to the small business world. However, I love it for one reason: the business lessons. It’s a marvellous microcosm for the business world and emphasises some of the amazing abilities and frustrating failings of the entrepreneurial world.
I have watched the show all the way through but this series I decided not to be a passive observer and get stuck in to offer my thoughts on any foodie that makes their way passed Evan’s lair in the basement and through those ominous sliding elevator doors. So this series I’m going to pull out some of the business lessons gleaned from any brave foodie to enter The Den. I’d also like to point out that what follows is not a criticism but a critique; even if it goes badly wrong, anyone that demonstrates the stones to go on TV to bare all has my respect!
Season 15: episode 8
Entrepreneur(s): Sarah Hilleary
Elevator Pitch: great tasting gluten free cakes with 9 flavours in a range of formats
Asking For: £75k in exchange for 5% equity
What Went Well?
The Product: it’s on trend. The feedback from all the Dragons on taste was very complimentary, which is clearly a must. It’s well packaged and well thought out in terms of market positioning and pricing (which is usually out of kilter with reality on ‘artisan’ foods).
The Plan: the foodpreneur was very clear with her reason for entering The Den: the opportunity to launch in Tesco Express. Not only is it a great selling point but it shows very clear direction which is quite often lacking from pitches.
The Brand: I can’t say it loudly enough: YOU LIVE AND DIE BY YOUR BRAND. This brand was very well joined up; even down to the Temptation Officer living and breathing the brand assets with a cheeky wink every now and again.
What Could Have Gone Better?
The Numbers: Tuker said, ‘rule number 1 in The Den: you’ve got to get your figures right’. Well unfortunately she didn’t. However, Tuker did launch a bit of a financial assault on the foodie. You could argue it was a bit unfair and most people would crumble under that kind of pressure.
Business Valuation: now this is always a contentious issue – it’s the battle ground in an investor/entrepreneur relationship. For me the ball was dropped when the foodpreneur admitted that the valuation was delivered by a third party. Terminal Value calculated on hugely successful (and ultimately very different) business models was a faux pas.
‘Artisan’: I’m sorry but this is a bugbear of mine. The ‘artisan’ label has become far too manufactured and I fear it’s designed to hoodwink shoppers. If this business has designs on expansion that label cannot carry through.
What Other Lessons Can We Learn?
The Power is in the Plan: I truly believe that this pitch was saved because of the strength and clarity of the entrepreneur’s plan. For an investor it’s absolutely paramount that they understand where their money is going and how the entrepreneur is going to deliver the (usually) ambitious numbers. These elements were evident today!
Outcome: Success! 30% given to the new Dragon Tej Lalvani with a buy back option.
Would Munkee invest? Can I sit on the fence? The business proposition and branding are fantastic. However my nervousness is in the product category. It’s a crowded market and scalability isn’t easy without lowering quality or principles. However, if this is possible then B-Tempted might be onto a winner. So would I take a punt? Yeh go on!