How to pitch to a Dragon: Deborah Meaden shares 5 quick-fire investment tips
Speaking on-stage at the Sage Summit, the Dragons’ Den star reveals her best bits of advice for start-ups entering the Den
The longest-serving female dragon in the Den, serial investor Deborah Meaden has graced our television screens for over 10 years now – and her appetite for investment shows no signs of stopping.
An entrepreneur from a young age, Meaden made her fortune in the travel and hospitality sectors, leading a management buyout of family holiday park business Weststar Holidays in 1999. After growing the company to provide holidays for 150,000 people every year, Meaden made a partial exit in 2005 in a deal worth £33m, before selling her remaining shares for a reported £83m two years later.
Having made a little over 50 investments on the series since being introduced in season three, Meaden, who also appeared on Strictly Come Dancing in 2013, certainly has an investor’s eye.
While the thought of entering the Den and pitching in front of five dragons ready to rip apart your business plan would be enough to convince any start-up to stay at home, luckily for us, Meaden isn’t shy when it comes to offering advice.
Speaking on stage as part of Sage Summit UK, the business mogul shared her five quick fire tips for start-ups looking to enter the Den – and come back out with a Dragon on-board…
Think about what the investor wants
Having run the gamut of pitches in her time on the show, Meaden says that nearly all unsuccessful applicants to the Den make the same mistake; they don’t think about what the investor actually wants and how they would make a return on investment.
Meaden argues that entrepreneurs are prone to overloading their presentations with superlatives, spending too much time talking about how marvellous and wonderful their product is – when all an investor wants is cold hard facts.
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“An investor wants to know ‘why me?’. Why would I want to get involved in this business? Why am I the right investor for you?”, she explains.
“I often say to people, pitch from your side, and then listen to your pitch from an investors side. Make sure an investor knows they’re the right fit and why they should be as excited as you are.”
Don’t worry about making mistakes
Over the years, viewers of the hit BBC Two show will have been treated to some amazing ideas, but also, some calamitous pitches.
A tense room with a lot at stake, it’s not unusual for entrepreneurs to fluff their lines, freeze on the spot or even be reduced to tears.
However, like any good entrepreneur, Meaden says that even mistakes can present start-ups an opportunity to showcase their commitment to their cause.
“The best pitches are often the ones that go wrong. I want to see someone who really understands their business. Even if they make a mistake, it proves they haven’t learnt it by rote”.
Meaden recalls how an 18-year old Jordan Daykin entered the Den with his plasterboard fixing start-up GripIt Fixings – a pitch that skirted disaster but went on to become one of her most successful investment.
Whist showcasing his product to seemingly interested Dragons, Peter Jones decided to take a more ‘hands-on’ approach to determine the suitability of the business and yanked the fixings clean off the wall.
However, a seemingly disastrous development was turned on its head by Daykin, who quickly retorted that wet plasterboard was the real offender, not his product, and this was the clincher for Meaden.
“At that moment, I thought ‘you’ve got something. You didn’t panic. You’ve got absolute competence in your business.”
Investing £80,000 for a 25% stake in the business, the Dragon’s intuition has certainly payed off – with GripIt Fixings becoming valued at £17.5m just 18 months later.
Sure fire proof that entrepreneurs need not panic if everything doesn’t go entirely to plan!
Run the businesses yourself
Taking over from Rachel Elnaugh in August 2006, Meaden admits that over the course of her tenure on the show, she’s actually changed her mind on what type of person and business she’s looking to invest in.
Originally investing solely because of product, the 58-year-old says that she now needs the right attitude and personality, before she’ll part with any cash – and doesn’t want to waste anytime “bolstering the human side”.
“I need calculated risk-takers, I need to understand they have a basic understanding of the mechanisms of business. I kind of assume they understand what P&L is and why cashflow is important.”
Indeed, businesses seeking investment in the Den should be looking for a hand-up not a hand-out and Meaden is clear about what her side of the bargain should entail.
“I should be spending my time helping them grow the business, not run the business. They [business owners] don’t need to be right, they just need to show they’ve got the ability to learn right.”
Keep it simple
It’s a hard truth to take for some, but after the TV cameras turn off normal life resumes for both successful and unsuccessful contestants on Dragons’ Den – with no guarantee of a happy ending. Indeed, even start-ups fortunate enough to receive investment can end up folding.
Meaden says that businesses can sometimes forget why their customers even love them in the first place and lose sight of their actual purpose and end-goal.
Deviating too much from their original pivot, businesses wind up in no man’s land – and few are able to make it back to where they once were.
Urging businesses to remember what really matters, Meaden says start-ups need not complicate the process.
“Business is simple. Do not over complicate it. I really admire people who take what appear to be really complex issues and boil them down so they know exactly what they want to do.
“It’s not easy, it’s very hard. But it’s simple if you allow it to be simply.”
Make sure your business is better not different
For many aspiring entrepreneurs still waiting for their lightbulb moment, identifying sector trends can prove fruitful on determining what type of business to start.
Meaden says that while our fundamental needs such as eating, drinking and having fun haven’t changed, the delivery of such is changing rapidly – and this presents huge opportunities.
“For me, it’s less about sector and more about the innovation behind that sector. Our expectation of delivery is growing”
While the pressure is certainly on for the next big tech start-up, ‘the Queen of the Den’ says that start-ups shouldn’t confuse something being different, for it being better – and should always remind themselves what the real value of their product actually is.
“Is it smarter? Faster? Cheaper? What is it that makes it better? If I can understand that, then I’ll want to get involved with that business.”
For more advice and inspiration from Deborah Meaden click here.