Lessons from Dragons’ Den, week 9: Five statements that will scupper any deal
How to destroy a deal with just a few little words
With just one pitch resulting in success, this week’s episode of Dragons’ Den offered little encouragement for anyone thinking of putting their vision in front of an investor. The Dragons were pithy and ruthless; the applicants were weak and uncertain.
The anxiety of the potential investees was encapsulated in a series of awkward statements which antagonised the Dragons and turned the applicants’ chances to dust. These self-defeating aphorisms demonstrated that, while an entrepreneur seeking funding must build a long and detailed case to convince an investor, they can destroy their chances with just a few words.
Here are five statements to avoid at all costs during the pitch process… each borne out by this week’s exchanges in the Den.
“I believe in my product”
When quizzed by Deborah Meaden about her tool for separating eyelashes, Mancunian Michelle Savage was quick to tell the Dragon how much she believed in the product. Frankly, if she’d told Meaden that the product was garbage and women would be better off parting their lashes with a rusty penknife, she wouldn’t have elicited a worse response.
Investors don’t want to hear how much an entrepreneur believes in their product. As Meaden said, every entrepreneur feels this way. It’s a given, not a USP. When you tell someone that you really believe in your product, it implies that you’re struggling to come up with more concrete reasons to invest – and suggests that you’re the sort of person who relies on blind faith rather than reason and evidence. Exactly the opposite of what an investor wants to see.
“I’d give our partnership 100%”
Another of Savage’s many mistakes on this week’s show. When you receive a substantial amount of money from an investor, your full commitment should be taken for granted; if someone’s prepared to put money into your company, it’s the very least they’ll expect.
By telling an investor how hard you’ll work for them, you’ll actually plant a seed of doubt in their mind. After all, someone who’s truly committed to their entrepreneurial future shouldn’t even have to mention it. The investor might also wonder whether you’ve always given ‘100%’ to your business – if they get the slightest whiff of laziness or complacency, they’ll bolt like a shot.
“I’m not a salesperson”
If you really want a serious businessperson to invest in you, these four words, which sealed bird feeder entrepreneur Julian Lipton’s fate this week, amount to a suicide note. An investor might occasionally wish to take a punt, and invest in someone who’s got the ideas but no acumen. But, 99% of the time, they want someone who’s as sharp on the sales front as they are.
In a salaried job, you’re just a cog in the machine; as long as you can perform your own function, that’s fine. But, as an entrepreneur, you have to be able to do everything – and selling is one of the most important functions of all. If an investor thinks you can’t sell, they’ll come to the conclusion that you’re incapable of growing your revenues, and giving them the return they expect.
“I’ll need to go back and look at the figures”
Admittedly, no-one actually uttered these words this week, but it’s a fairly common refrain in the Den. Practically every week, an applicant tries to wriggle off the Dragons’ hook by telling the investors that they’ve left their financial knowledge at home; unfortunately, this ranks alongside ‘the dog ate my homework’ on the list of all-time crap excuses.
If you can’t master the numbers for an investor who could make or break your business life, then what chance have you got of coping with the day-to-day challenge of running a successful business? Investors expect you to have the figures at your fingertips; if you don’t, you’re guaranteed to make a dog’s dinner of your pitch.
“I may have to come back for more money in the future”
None of the Dragons was impressed when one of this week’s applicants told them they may require further funding in future. Investors expect to make one cash injection, and then recoup the money – and plenty more besides – at some point in the future. They don’t expect to have to keep bailing you out with more and more injections further down the line.
If you suggest a requirement of further funding in future, you’re telling an investor you haven’t got a clear business plan, and you’re not totally convinced the venture will succeed – and presenting yourself as a risk, rather than an asset.