If you haven’t read it, Part 1 of our review of Dragons’ Den and how it fails to reflect the world of Startup Angel or early commercialisation investment is right here at http://wp.me/p2tfUm-4i – if you haven’t seen the show you’ll have no idea what we’re talking about. If that’s the case, take a moment, go to YouTube and find some clips of the BBC version. (Hosting barely legal copyrighted material is what YouTube excels at, after all… and you’ll probably find lots of creative abuse for the quirky inventors too in the comments if you’re lucky!)
In that initial post we had some laughs at the expense of the show but perhaps missed at least part of the point that the “Dragons” aren’t claiming or pretending to be “Angels” or act like them – though they do very occassionally, and terribly inconsistently act as “Dragon Angel” (now there’s a beast!) investors for businesses they just happen to like the look of.
The point was, if all investors in the world followed the rules set out and adhered to in 99.9% of the episodes, the majority of the most valuable online businesses and mobile applications we all use today would be largely unknown and run as hobbies by guys working day jobs at McDonald’s, Radio Shack or Microsoft. Imagine pitching Twitter to those guys…? “Why would complete strangers care about what I think?! What’s your business model?! I’m Out!!”
So, what can you learn from Dragons’ Den that will help you face off with an investor(s) be they of the Angel or Dragon variety? So far in PRIMEr’s experience we’ve failed in all the following ways in differing degrees and at different times with different levels of early adopters, evangelists, and investors (thankfully none of them in make-or-break circumstances).
A lot of what we’ve not done right has come down to the way we may have reacted to critical questions and the answers we gave about what we’re pitching… As hard as it was admit it – we needed to change some things. We now use these following “Dragons’ Den rules” to try and make sure we don’t repeat them before each meeting with a potential early adopter or investor:
- Make sure you understand what a successful outcome of the meeting will look like. What are you asking for? What do you want them to commit to? What are you willing to give away to bring them into the fold? What do you need to know about them before commiting to anything.
- Create your pitch and PRACTICE it. Practice your pitch, learning from the mistakes you’ve made in explaining the product before. It sounds obvious but practice will make you more confident – there’s nothing worse than pitching with a wavering voice and sweat pouring down your forehead in front of people who you need to believe in you. This also concerns your visual presentation that must be part of your brand so it all works seamlessly with everything they’ve seen from you (i.e. there is value and consistency in the brand) and dress business-like but still in a way that reflects your individuality and brand. You brand may be emphasised by wearing tracksuits or dinner suits, for example.
- Compile the list of the questions you’re bound to be asked and “Wargame” them. If you’ve met with early-stage investors before or potential early customer adopters looking at adoption as an investment, you’re likely to have a long list of “nasty” questions you’ve been asked and will be asked again. Write them down, prepare answers and “Wargame” (call it “Tiger Team” if you like that better) the meeting with someone acting as the most cantakerous, skeptical would-be investor asking them. Then swap roles. It’s fun. Really. (The dinner party board game, “How to Host a Pitch Meeting” is coming soon!)
- Check your verbal attitude. Don’t get defensive when being asked to explain answers to questions you find tedious and obvious (they are to you, but of course the investor hasn’t been through the same journey as you and can’t read your mind) – and listen to the question fully before assuming it’s the same irritating question you’ve been asked before. Especially don’t interrupt with the answer to the question you think you’re being asked! Get feedback from the “wargame” investor about how you came across in handling this situation. You could try getting a trusted, neutral colleague to do this to give you honest feedback.
- Check your physical attitude. You may respond to the irritating, oft-heard question in a way that doesn’t sound defensive but make sure you’re not being defensive with your physical communication. Get a co-Founder (or that trusted neutral colleague) to film you while they ask you all the annoying questions you’ve been asked in the past. Do you grimace when the question is asked? Roll your eyes? Laugh? Point at the questioner and try and be condescending? Or fold your arms, frown and take on a defensive pose? You may not realise you’re doing any of these until seeing it in full living colour on the screen.
- Know your numbers and your technology. Some investors will want to understand more about the technology, your ownership of it, while others may want to know more about your numbers. Most likely both. If you’re asking for a certain amount of cash make sure you know what you plan to do with it and how reasonable it is in relation to the technology you’re using and the business model you’re pitching. Luckily, unlike in Dragons’ Den, you’ll have notes to refer to… and you can bring along your CFO and your CTO (if they aren’t you or your co-founder) to deal with anything too curly.
- Leave with a call to action. Commit to follow up in a day or so to see how you both thought it went.
- Debrief on what happened. You can always learn something no matter how successful it was but chances are you may not have emerged with everything (or anything) you want. Try and see how to turn it around next time.