Monday, April 20, 2009

A Day in the Dragons' Den

It was a big day Saturday at CBC’s Toronto broadcasting centres, with more than 120 “pitchers” lining up to audition for the new season of Dragons’ Den. I was one of several outsiders recruited to listen to the pitchers and help recommend who should be invited to the tapings, which take place in May.

I enjoy doing this job (it was my fifth time) because it’s a great chance to help entrepreneurs focus their message (and sometimes their thinking). So I tended to be a little slower than most of the other “deputy dragons,” who are mainly concerned with how these people will come across on TV.

My most common advice to pitchers:
1) tell me what your product or service does before giving me all the history;
2) make sure you know what your customers want, not just what you want to produce;
3) never, ever, say,"I just know this will be successful." Give me some evidence.

The good news is, there were a lot of great pitches. We actually met people with established companies and real products, who were looking for dragon capital to get their business to the proverbial next level. Most often we see people pitching unproven concepts. The Dragons will occasionally consider products that have been undermarketed, or are close to hitting the market, but they, like all investors, prefer to put their money on products with a track record.

Potential is good, but the best way to test potential is get out there and actually sell your products and services in the free marketplace.

We also saw a few people with what I call “Forbid” ideas (a concept borrowed from dragon Kevin O’Leary, who once told a pitcher “I forbid you to spend any more time on this idea”). Here’s a clue: if you have been working on your idea for years, if friends and family are not fighting to invest in your business, or if you can't convince any retailer to carry your product, chances are you've been spending your time on the wrong thing.

Yes, miracles can happen – but smart entrepreneurs don't count on them.

And don't expect high-priced angel investors such as these Dragons to give you the hands-on coaching you need to succeed. They want to invest in people who know what to do and where they're going, and just need more cash to get there.

As I Twittered on Saturday evening, if you don't have a product on the market yet, at least be talking regularly with your potential customers. If you want me to invest in your company, tell me stories that illustrate how badly the market needs your product, and how impatient the marketplace is for your solution. Get me excited about what you're doing. It’s not the product that angel investors or VCs are buying. They're buying your unique abilities to make the product successful.

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