Passing a famous, sparsely furnished brick-walled warehouse, you reach an elevator. In 30 seconds you will face the most difficult throw of your life.
Pitching your business to five billionaire investors is no easy task, let alone doing it in front of the Dragon’s Den cameras.
Of course, before presenting to prominent business figures such as Deborah Meaden, Peter Jones, Sara Davies, Steven Bartlett and Touker Suleyman, the Dragon’s Den entrepreneurs have put hours of meticulous planning into their presentations.
They will consider every detail as they present their product ideas to the ruthless business owners in front of them. These presentations will be impeccable, right? Mistaken.
Pitch perfect? Dragons’ Den recently returned for its 21st season, with Peter Jones as the only remaining original dragon.
The five dragons have seen it all, from insincere contestants to a traffic light system that the dragons said was “the worst invention featured on the show.”
So, when it comes to launching your business successfully, what tips should you keep in mind? We asked two experts for suggestions.
How to find investors for your business
Unlike the contestants on Dragon’s Den, you’re unlikely to find five prominent business figures sitting in a row in front of you in the blink of an eye.
Accessing your contact book should be the first port of call, says Scott Hill, corporate finance manager at accounting firm Old Mill. He recommends looking to your family, friends and business networks as a starting point.
‘It’s also a good idea to contact a corporate finance advisor; They are experts in corporate investment, so they are in the best position to share the different sources of financing available and, more importantly, explain the specific pros and cons of each option,’ adds Hill.
Sabean Sithamparanathan, founder of tracking tag company PervasID, tells This is Money that his first step would be to establish the level of funding his company needs, whether it’s seed funding or series A, B or C investment.
Above all, when presenting, you must be transparent and honest, building trust and credibility.
On average, seed funding is used to raise between £500,000 and £2 million, while Series A funding typically raises up to £15 million, Series B up to £50 million and Series C can reach hundreds of millions. .
“The next step is to meticulously develop an extensive targeted list of potential investors,” says Sithamparanathan. “Focus on venture capital firms and corporate venture arms of strategic companies that align with your investment criteria and typical deal size.”
“Whichever investor you choose to work with, they should not only align with your financing needs but also share your vision and values,” adds Sithamparanathan.
Make your speech stand out from the crowd
Like dragons, any potential investor likely has several people competing for their attention and money.
Making sure your pitch is memorable is key to winning over potential investors, although it’s wise to steer clear of some of the mistakes of previous contestants on the BBC show.
Avoid arguing with your potential investors, demonstrating products that don’t work, or overvaluing your business.
Scott Hill says it can be easy to forget that you’ll need to work closely with investors
Instead of trying to wow your potential investors with a gimmick, the trick to grabbing their attention is to leave no stone unturned.
“The pitch should strategically address key components to capture investors’ attention and convey the potential of the business,” says seguran. “The key message to convey is the extent of the market gap and unmet needs, and how your solution effectively addresses these challenges, emphasizing your unique selling points.”
Hill says the way an investor will assess risk is by evaluating the company’s past and current performance.
He adds that it is best to “strike a balance between past successes and future potential.”
“It’s also important to talk about your own track record and that of the company, because your personal experience, knowledge and credibility will be a crucial part of any investor’s decision,” adds Hill.
It’s also essential to lay the groundwork before meeting with investors.
“Before pitching your business to potential investors, thorough preparation is essential to make your pitch stand out,” says Sithamparanathan.
“Making the presentation as visual as possible with charts, graphs, product demonstrations, and customer installations is great advice.”
Be Confident…But Don’t Be Arrogant
When trying to make your entry stand out, following Dragon’s Den contestants may not be a smart move.
Even if you fail to secure investment after launching, what you don’t want to do is leave your potential investor with a bad taste in their mouth and a negative view of you and your business.
By alienating investors, not only do you risk cutting off a future source of cash, but other potential funders might be less willing to listen to your pitch if you become known for upsetting investors or failing to articulate how your business works. strategy. business.
“When presenting yourself and your company during presentations, it is essential to project professionalism, confidence, openness, honesty and enthusiasm,” says Sithamparanathan.
The founder of PervasID adds that when he gives a presentation, his leadership team dresses formally and focuses on reflecting their respective experiences.
“Above all, when you give a presentation, you must be transparent and honest, building trust and credibility,” he says.
Hill agrees that honesty is the best policy.
‘Again, it’s about finding the right balance. “You need to be confident, both in your own abilities and the potential of the business, but there’s a good chance you’re about to grow the business to a new size and scale that you’ve never experienced before,” he says.
«Investors always consider it positive to be aware that they are entering uncharted waters.
Entrepreneur: Sabean Sithamparanathan has raised £7.8 million in funding across two investment rounds for his PervasID tracking tag business
Entrepreneurs should also not expect Dragon-style interrogation from potential investors.
‘Don’t believe what you see on television, it’s a lie!’ Hill says. ‘You will often see potential investors grilling companies, discouraging many from even submitting proposals. But real-world negotiations are largely a two-way street.
“Yes, you are selling your business to the investor… but there is also an element of the investor introducing themselves to you, and it is important not to forget that.”
How to close the deal
“I’m in” are the words you’re desperate to hear from potential investors. If you’ve made it this far, then the worst is behind you, but now is not the time to sit back and relax.
Someone may be willing to invest in your business, but don’t let this cloud your vision. Making sure the investment is right for your business is not a step you should overlook.
Sithamparanathan recommends carefully reviewing a term sheet or letter of intent to make sure your company’s interests are taken into account, including ensuring the valuation is neither too high nor too low.
As expected, not all of the program’s offerings come to fruition when it comes to the fine print.
According to Sithamparanathan: ‘It is also prudent to assess the track record and equity of the investor by referring to his interactions with other portfolio companies.
“Beyond the financial investment, the investor should bring additional value, such as industry experience or valuable customer contacts.”
Beyond their experience and cash, business owners should keep in mind that they are also building a partnership with their new investor.
“You’re very likely to spend a lot of time with your investor, so it’s very important that you get along,” Hill cautions.
‘Although the legal and financial terms and conditions are studied in detail, it can be very easy to overlook the simple question: “Do I like the people I will be working with?”‘
What to do after launch
Unlike Dragon’s Den, where the deal is sealed (or not) inside the room, in real life the work continues long after the release.
Sithamparanathan suggests that you follow up with investors and offer to provide them with additional information to help them with their decision.
He says, “The best thing you can do is go into the process with the intention of building a collaborative relationship, rather than simply making money.”
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.