Dragon for a Day

I spent another Saturday today as a deputy dragon for CBC’s Dragons’ Den show. (See previous post for my first outing.)

My job was to help the Den’s VC consultant, Sean Wise, audition Toronto-area candidates who want to get on the show. In all, 80 people auditioned today, which represented the biggest turnout DD has ever had.

As usual, the candidates had just one minute to make their pitches, with two minutes more for the Q&A with the deputy dragons. The pitches were better than last time, but most people still botched it, by talking too long about their beloved product or service, and not giving enough (or any) time to outlining the opportunity, the market, or why the Dragons should consider investing in their firms. Remember: investors rarely care what your opportunity is until they know what kind of return it’s likely to generate.

And too many people were unable to provide sales projections when asked. Note: If you're ever raising money for a venture, and a potential investor asks you how big this opportunity is going to be, please don't say, “Really big.” It doesn't sound very professional.

(And don't say what one person said, either, which is: “Well, Canada has a population of 93 million, and 5% of them love camping…”)

There were, of course, some great pitches and great opportunities, but I can't tell you about them – you’ll have to watch the show next fall.

One more caution: Angel investors, venture capitalists, indeed any kind of investor (except maybe Aunt Mary, but you can bet she’s thinking it) will demand evidence that what you do is competitor-proof. If you don't have some secret sauce that prevents others from duplicating what you do, why should they invest in your business? If they think your idea has potential, they could just cut you out and start their own venture.

So my most common question to the pitchers was: What advantage do you have that will prevent someone else from duplicating or undercutting what you do?

Here are some of the answers I received. I’ll leave it to you to figure out which ones the investors most want to hear:

“Because I think I can be first to market.”
“Because I've been working on this idea for 18 years.”
“Because I have exclusive rights to distribute these products.”
“Because we have a patent.”
“Because we've applied for a patent.”
“Because we've got clients tied to exclusive contracts.”
“Because the two partners have really great chemistry together.”

(If you really want to know which ones work and don't work, leave a comment below).