Passing through a famously sparsely furnished brick-walled warehouse, you enter a lift. In 30 seconds, you’ll face the hardest pitch of your life.
Pitching your business to five multi-millionaire investors is no easy task, let alone doing so in front of cameras on Dragon’s Den.
Of course, before stepping in front of leading business figures like Deborah Meaden, Peter Jones, Sara Davies, Steven Bartlett and Touker Suleyman, the entrepreneurs on Dragon’s Den have poured hours of meticulous planning into their pitches.
They will consider every detail, as they pitch their product ideas to the ruthless business owners in front of them. These presentations will be flawless, right? Wrong.
Pitch perfect? Dragons’s Den recently returned for its 21st series, with Peter Jones the only remaining original dragon
The five dragons have seen it all, from less than truthful contestants to a traffic light system the dragons said was the ‘the worst invention pitched on the show.’
So, when it comes to pitching your business successfully, what advice should you take note of? We asked two experts for their suggestions.
How to find investors for your business
Unlike contestants on Dragon’s Den, you are unlikely to find yourself with five leading business figures sat in a line in front of you at the drop of a hat.
Tapping into your contact book should be the first port of call, Scott Hill, corporate finance manager at accountancy firm Old Mill says. He recommends looking to your family, friends and business networks as a starting point.
‘It is also a good idea to get in touch with a corporate finance advisor; they are experts in corporate investment, so are best placed to share the different sources of funding available and – more importantly – explain the specific pros and cons of each option,’ Hill adds.
Sabesan Sithamparanathan, founder of tracking tag business PervasID, tells This is Money that his first step would be to establish the level of funding that your business needs, whether seed funding or series A, B or C investment.
Above all when pitching, you should be transparent and honest, building trust and credibility
On average, seed funding is used to raise between £500,000 and £2million, while Series A funding typically raises up to £15million, series B up to £50million and Series C can reach into the hundreds of millions.
‘The next step is to meticulously craft a targeted extensive list of potential investors,’ Sithamparanathan says. ‘Focus on venture capital firms and corporate venture arms from strategic companies that align with your investment criteria and typical deal sizes.’
‘Whichever investor you choose to work with, they should not only align with your funding requirements but also share your vision and values,’ Sithamparanathan adds.
Make your pitch stand out from the crowd
Much like the dragons, any potential investor is likely to have multiple people vying for their attention and their cash.
Making sure that your pitch is a memorable one is key to winning over potential investors, though it is advisable to steer clear of some of the pitfalls of previous contestants of the BBC show.
Avoid arguing with your potential investors, demonstrating products that don’t work or over-valuing your business.
Scott Hill says it can be easy to forget that you will have to work closely with investors
Rather than looking to wow your potential investors with a gimmick, the trick to capturing 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,’ Sabesan says. ‘The key message to get across is the scope of the market gap and unmet needs, and how your solution effectively addresses these challenges, emphasising your unique selling points.’
Hill says that the way an investor will assess risk is by evaluating the business’s past and current performance.
He adds that it is best ‘to strike a balance between past successes and future potential’.
‘It is also important to talk about your own track record as well as that of the business, because your own personal experience, knowledge and credibility will form a crucial part of any investors’ decision,’ Hill adds.
Laying the groundwork before meeting investors is also essential.
‘Before presenting 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 demos, and customer installations is a top tip.’
Be confident… but not arrogant
When trying to make your pitch stand out, following Dragon’s Den contestants might not be a wise move.
Even if you fail to secure investment after the pitch, 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, you not only run the risk of cutting off a future cash source, but other potential funders could be less than willing to hear your pitch if you become known for rubbing investors the wrong way, or failing to articulate the workings of your business.
‘When presenting yourself and your company during pitches, it’s crucial to project professionalism, confidence, openness, honesty, and enthusiasm,’ Sithamparanathan says.
The founder of PervasID adds that when presenting, his leadership team dresses formally, and focuses on reflecting their respective expertise.
‘Above all when pitching, you should be transparent and honest, building trust and credibility,’ he says.
Hill agrees that honesty is the best policy.
‘Again, it is all about striking the right balance. You need to be confident – both in your own abilities and in the potential of the business – yet it is very likely you are about to grow the business to a new size and scale that you have not before encountered,’ he says.
‘Showing awareness that you are entering uncharted waters is always seen as a positive by investors.
Entrepreneur: Sabesan Sithamparanathan has secured £7.8million of funding in two investment rounds for his tracking tag business PervasID
Entrepreneurs also shouldn’t expect a Dragon-style interrogation from potential investors.
‘Don’t believe what you see on TV – it’s a lie!’ Hill says. ‘Often you will see potential investors give businesses a real grilling, which puts many off from even pitching in the first place. But negotiations in the real world are very much a two-way street.
‘Yes, you are selling your business to the investor… but there is also an element of the investor pitching to you, and it is important not to forget that.’
How to seal the deal
‘I’m in’ are the words you are desperate to hear from potential investors. If you have made it this far, then the worst is behind you, but it isn’t 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 that the investment is the right one for your business isn’t a step that you should overlook.
Sithamparanathan recommends trawling through a term sheet or letter of intent with a fine-tooth comb, to make sure that the interests of your firm are being kept in mind, including ensuring that the valuation is not too high or too low.
Unsurprisingly, not all deals on the show go through when it comes to the small print.
According to Sithamparanathan: ‘It’s also prudent to assess the investor’s track record and fairness by referencing their interactions with other portfolio companies.
‘Beyond financial investment, the investor should bring additional value to the table, such as industry expertise or valuable customer contacts.’
Beyond their expertise and cash, business owners should keep in mind that they are also building a partnership with their new investor.
‘It is very likely that you will spend a lot of time with your investor, so it is really important that you get on well,’ Hill warns.
‘While the financial and legal terms and conditions are studied in detail, it can be all too easy to overlook the simple question of “Do I like the people I will be working with?”‘
What to do post-pitch
Unlike Dragon’s Den when the deal is sealed – or not – within the room, in real life the the work continues long after the pitch.
Sithamparanathan suggests that you follow up with investors and offer to provide any additional information to help them with their decision.
He says: ‘Your best bet is to enter the process with the intention of building a collaborative relationship, instead of just cash’.
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