Lessons from Dragons’ Den, week 6: A tale of two pitches
How to pitch to investors - and how not to do it
This week’s episode of Dragons’ Den brought us pitches from opposite ends of the quality scale. On the one hand we had Suffolk-based race engineer Andy Bates, who charmed the Dragons with self-assurance and humility, and walked away with an investment from Peter Jones.
On the other hand we saw Teeside sign-maker Alun Pearson give what Jones described as “probably the worst presentation I’ve ever seen in the Den” before collapsing under the Dragons’ questioning, and trudging out with his tail between his legs.
Why did one pitch turn out so well, and the other so badly? Well there were plenty of reasons, but we’ve homed in on five of the most significant.
From the moment Pearson entered the Den, it was clear he hadn’t worked out what he was going to say – he didn’t even seem to know what he wanted from the Dragons. Everything that squirmed from his mouth was confused; he got his gross and net profit mixed up, failed to understand the distinction between margin and mark-up, and then, when asked to declare his personal earnings from the business, he gave two completely different numbers. It was impossible not to feel a little sympathetic for a man clearly out of his comfort zone.
In contrast, Bates was a model of consistency. He went in there with a clear vision of his business, and it showed in his measured approach. His initial pitch took the Dragons on a step-by-step journey through his business, and his subsequent responses showed a watertight knowledge of his financials. He told the Dragons exactly what they’d be getting for their money – and what he wanted from them.
When we asked Bates the secret behind his clarity, he told us:
“You have a while standing outside to think about things, and you have to gather your thoughts. I didn’t panic cram, I cleared my mind, I knew I’d rehearsed the pitch enough times, and just hoped someone would pick up on it.”
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If you don’t understand your own company, it’s going to be nigh-on impossible to get an investor to understand it. This maxim rang true once again last night, as Pearson infuriated the Dragons with his lack of detail. Peter Jones said that Pearson’s biggest mistake was failing to know his core business, while Hilary Devey asked, “how do you hope to grow your business if you can’t even motivate yourself to do the biggest pitch of your life?”
Bates couldn’t have been more different – he’d clearly done hours of research, and had explored every nook and cranny of his company’s inner workings. He told us:
“You have to analyse everything – in the normal week you often don’t get the time for the underlying work on the business. Dragons’ Den forced me to look, and do an awful lot of groundwork. Before the show I broke the business down into its core areas, and looked at the figures for each one. I also did my homework on the Dragons themselves, and checked over previous pitches.”
Bates’ rigorous preparation was also reflected in the smooth answers he gave to the Dragons’ questions. He continued: “You have to apportion the credit where it’s due, and I said right from the start I’ve had loads of support when it mattered. My partner definitely went through everything with me – we went through questions, she ripped me apart when it was needed and presented counter-arguments. We did pitches on the phone, she told me bits of what I said were rubbish, and the pitch was stronger for it.”
Even before the Dragons’ questions began, Pearson began stopping and stuttering, and it got little better from then on in. He lost the thread of his sentence at regular intervals throughout the pitch, and his awkward body language betrayed his anxiety.
As the pitch wore on and the Dragons turned up their scrutiny, Pearson wilted under the heat. But Bates, a former firefighter, was never going to make that mistake; no matter how high the temperature was turned, he handled it with consummate, though never excessive confidence.
Bates told us that he drew on his emergency services background to douse the pre-pitch nerves.
“As a fire-fighter you get into a mindset when you’re sat on the fire engine on the way to a job, and you deal with it. I took this mindset into Dragons’ Den; in fact I asked myself “what’s the worst that can happen? At the very least, I’ll get some reasoned views from some very accomplished people.”
“It was always going to be nerve-wracking, but you can’t go in full of doubt. You’ve got to go in without doubt, and be prepared to ride out any storm.”
There’s no point trying to hide information about your business from an investor – if they decide to invest in you, they’re going to find out eventually anyway. But this simple truth apparently never dawned on Pearson. When asked to talk about his company’s profit, the applicant initially refused to divulge the figure, before changing his mind.
Had he disclosed the figure straightaway, Pearson could have clawed back some favour from his audience – Deborah Meaden said during the pitch that “investing a business that is making a profit is always of interest to a Dragon”. As it was, he succeeded only in hammering another nail into his coffin.
In his defence, providing details of profits to the watching millions, including customers, is not something every business owner would welcome and Pearson perhaps thought the strength of his product alone and creation of a new business for it would circumvent such an examination.
So while Pearson’s opacity betrayed his insecurity; in contrast, Bates answered every question fully and frankly, providing comprehensive detail whenever required. Jones said he loved Bates’ honesty; in the end, this might have sealed the investment.
As Pearson’s composure deserted him, so too did his manners. Paphitis had to force the entrepreneur to stop talking at one point, and his smirk created an impression of smug superiority – hardly the sort of air you want to cultivate.
Bates, meanwhile, was the model of politeness – he even thanked the Dragons when they told him they were out. His claims about the business were modest and realistic, and he never fell into the trap of boasting about his achievements.
Bates told us: “If I’m honest, the humility came from my mother and father. They brought me up with the lesson that pride comes before a fall, and you need to treat people properly – and be polite.”
Ultimately, manners cost nothing – and they may one day help you scoop an investment worth tens of thousands of pounds.