I love Dragons Den. There I said it. The drama, the crazy ideas, the courage and conviction that people have for their ideas AND the people who seem to get it all right. So it was with great excitement that I watched the show last night and it didn’t disappoint. However, what really struck me was the difference between men and women entrepreneurs, in a way that couldn’t have been clearer if it had been scripted. I’m going to commit a cardinal sin here and generalise based on these two examples, but I think there is a BIG lesson in here for us women…
Investment One: The men’s way…
Two men, Richard Enyan and Michael Davis, have founded Base Tone Slap . Richard has never held a full time job; Michael has done some ‘team building’. Base Tone Slap is a drumming group and they have decided that they want to enter the corporate team building market, using drum playing as a way of pulling corporate teams together. Between them they have very limited experience, no real revenue to speak of, no market understanding indicated and a £10k turnover.
What they were looking for: £50k for 10% (valuing their business at £500k!) Phew, I’d love to value my business at 500x of turnover
Amazingly the Theo and Peter lovefest decided that this was a worthwhile investment but at 40% – inspite of Duncan’s clear disdain and rubbishing of the business proposition!
What’s the learning? Be brave, be bold, believe in your product and don’t be afraid to try it on as someone may buy it. (and in the following video two guys value their web business at £1m and it doesn’t even have a website!) Why is this important, because typically women undersell and undervalue themselves. We should all take this on board as it is all about confidence and self belief. So ladies BE BOLD, you never know where it might take you.
Investment Two: The woman’s way
Sharon Wright has invented a revolutionary new product which enables engineers to pull cables through wall cavities (not sexy, but impressive!). It addresses a clear need, is very simple and has a BIG market both nationally and internationally. Sharon was very well presented, had her patent in place, was well spoken, her pitch was extremely well thought through AND she had a contract with BT (Sharon comes on at 2m 55s on the video). Watching her was a masterclass in how to get investment.
What she was looking for: £50k for 15% of her business (notice the 5% increase in equity offer from the above example). The dragons were all over themselves trying to invest in her business – she was a clear winner on many levels.
What happened next: Theo offered her what she was asking for but Sharon really wanted James and Duncan as they have a company that could support her venture. I agree with Deborah that any of the Dragons would have been effective in supporting her and her business. James and Duncan took the opportunity with gusto and offered her 25% for £80,000 which was ultimately negotiated down to 22.5%. I agree that she hadn’t asked for enough, and in fact she could have asked for £150,000 and still achieved a similar percentage. Which brings me onto the learning…
What’s the learning: Sharon did a fantastic job in the Den, easily the best pitch I have seen to date. However, Sharon easily gave up an additional 7% equity in her business too easily and without considering the consequences, this can really bite you in later years . Also, I think she didn’t ask for enough money – this is a classic female trait and most VC’s will tell you that women under-finance their businesses. Finally, as I said above, if you are looking for investment for your business, watching these clips of Sharon are a great place to start. She got it right on almost every level and had the dragons eating from her hands.
Did you see it? Tell us what you think!