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Episode Ten – Lessons on Raising Capital from the Dragons Den
Ian: : Welcome to the Business Coach Podcast, an advice-oriented series for Canadian entrepreneurs. I’m Ian Portsmouth, Editor of PROFIT Magazine and I’ll be your host as we tackle the hot issues and opportunities facing Canada’s small businesses. We’ve developed this podcast in cooperation with BMO Bank of Montreal. Over the course of the series I’ll be drawing on experts in a number of fields including some BMO experts in order to provide the credible information and prescription you need to run your small business better.
Whether or not you like or even have time to watch much television Dragon’s Den is one show that you don’t want to miss. Now in it’s second season on CBC TV it mixes business with game show with reality television into an entertaining series that might even teach you a few things about doing business, especially in the area of raising capital. Joining me to reveal some of those lessons and hopefully to share a few behind-the-scenes secrets of Dragon’s Den is Sean Wise. Sean has been a special advisor to the producers of Dragon’s Den for the past two seasons, he’s also Managing Partner of Wise Mentor Capital which provides consulting services to high-growth companies in their search for financing. Sean welcome to the Business Coach.
Sean: Thanks very much Ian, it’s a pleasure to be here.
Ian: : Now for those people in our audience who do not know what Dragon’s Den is, what is it?
Sean: Dragon’s Den is a business reality show that we brought over from Japan. It features five Canadian multimillionaires, listening to the pitches of entrepreneurs from coast to coast and deciding who to fund on the spot. Everyone who goes into the Den is seeking capital to grow their small business into a big business and everyone has an equal shot at coming away with capital. There is no one winner on Dragon’s Den. Every pitch can be a winner.
Ian: : And who does this capital come from? The Dragons themselves?
Sean: Yeah that’s an interesting fact. Some people actually think it’s CBC money that we’re giving out but we’re not. Of course CBC money is tax payer money and we don’t use it for those purposes. The money that the Dragons invest are their own capital. Every Dragon has to bring with them at least $250,000 and be willing to part with that over the course of the season, which in season one was six episodes and season two is ten episodes. But in fact most of them go well over that amount.
Ian: : Now you’ve been involved as an advisor and a producer of the show for both of the first two seasons. What goes into creating the show in terms of, of things like ah reviewing applications and auditioning people and ah how many contestants actually make the cut and are filmed?
Sean: Yeah I was actually surprised at how much work is done prior to entering the set. We go through all the applications which come in online, or which come in as a result of our twenty-city audition tour. So we’ll go across the country and audition contestants, trying to screen them for things the audience will understand, things the audience will relate to as well as good investment proposals. My job is sort of to rank them one two or three. One being something I would invest in myself, two being something that I could see being invested in and three being something that leaves me scratching my head. Then a producer from the TV side comes along and they rank them A B and C. A sort of being good television, easy to understand, a strong person who can explain what they’re doing, B being something which may lose a few people in the audience and C being something that leaves you scratching your head. We go through all the applications which this year was just over 3,000 if you can believe it, and we narrow it down to about 300 people. We invite those 300 people onto the, into the taping which this year took place over ten days, and from that we’ll edit it down to about, about 100 people will make the final cut.
Ian: : Now can you tell us how many people won investment on season two of Dragon’s Den?
Sean: Well I can’t. Well I could but I’d end up being fired. What I can tell you is that last year we did seven deals for just over $1.5 million and I can tell you we only had six episodes. This year we have ten episodes starting October 1st, and I can tell you that there are so many deals that a number of shows in season two have multiple deals in them. So I know the ads are already giving it away but we’ve invested more than $3 million over season two, but you’ll have to tune in to see which ones got the cash.
Ian: : Well we’ll certainly do that. Now what are some of the most interesting business concepts or products that made it into the Den because certainly from season one we know that there are all sorts of rather innovative and sometimes strange businesses being pitched?
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