Two days in the Dragons' Den: Tips for pitching your business idea

Written by Rick Spence

It’s noon in the Barbara Frum Atrium at the CBC’s Broadcasting Centre in Toronto. A nervous entrepreneur is scrunching up his cheat sheet as the cameraman counts down: “3€¦ 2€¦ 1. You’re on.” The entrepreneur begins, his hands shaking: “My name is €¦ and I have invented a way for golfers to shave 10 strokes off their game.”

Standing beside the camera, beaming what I hope is a supportive smile, I listen to the entrepreneur’s pitch. He introduces himself well. He quickly explains his background, and how he developed the ultimate golf accessory. But then he goes off course. He spends too much time on his prototype, fawning over it like a kitten. No analysis of the potential market, no marketing strategy, no description of how big this opportunity could be.

Such flaws could be excused at a Cub Scout hobby show. But this is an official audition for Dragons’ Den, the CBC-TV show that puts cash-hungry entrepreneurs in front of a panel of five multimillionaires looking for hot deals. And the Dragons don’t suffer fools, or inventors, gladly. If you can’t articulate the opportunity, your pitch is going down in flames.

On this Saturday in May, however, it’s just an audition for Season 2. Instead of the show’s fire-breathing stars—Kevin O’Leary, Robert Herjavec and the rest—there is me, a stand-in Dragon trying not to offend. My job is to help the show’s venture advisor, Sean Wise, assess the many entrepreneurs vying for the Dragons’ hoard. Do they have a real business? Can they state their value proposition fast enough to keep impatient viewers from hitting the remote? And so, reluctantly, a guy who has spent 20 years championing entrepreneurs turns mean and impatient. “How big is this market?” I ask. “What makes you better than the competition? How are angel investors going to make their 1,000% returns?”

In short, I became a Dragon (or maybe even a Dennis—see Jeff’s column in the June issue).

In my defence, many entrepreneurs had come unprepared for the rigours of angel investing. Too many seemed to think that one product makes a business. They didn’t understand that angels want to invest in a company that can “scale” quickly into a big business, and then attract acquisitive suitors who will give them the ROI they need.

Ever since I began covering entrepreneurship, I have been puzzled by the great venture-capital divide. Entrepreneurs complain they’d have to be Bill-bloody-Gates to raise venture funding, while VCs say they can’t find enough ideas worth investing in. It’s easy to side with the people who sacrifice everything for their business and still come up short in the eyes of professional investors. But as a deputy Dragon, I soon realized entrepreneurs are responsible for some of this gap.

I talked with people who have worked on their product for decades but have never done any market research. I pleaded with people to tell me what makes their product unique. I called one woman on her claim that Canada has 93 million consumers. And I tried to persuade several entrepreneurs that saying, “If we could get just 2% of this market €¦” does not constitute an investment-grade marketing plan.

If you ever pitch a Dragon, angel, venture capitalist or any other type of investor, consider these tips derived from my two days in the Den:

Speak up! Show some energy! Your eyes should sparkle. Your voice should be clear, confident, convincing. If you don’t show passion for your concept, who will?

Prepare. Wise had provided note cards on which people could write out their key points. What I couldn’t understand was why more of these people hadn’t prepared these outlines at home.

Don’t just recite your background. Tell a story that shows why you are the only one who could pull off this business.

Don’t bore me with details I didn’t ask for. If you’re dying to tell me all the features of your Mark II prototype, ask first if I’m interested. Investors don’t need to know-at least, not in your first meeting-how a product works. They just need to know how it helps your customers.

Quantify demand. “How big is the market for this product?” I would ask. The most common answer: “Really big.” “Who will buy this?” I asked. “Lots of people.” These non-answers are for amateurs. Calculate and provide specific numbers.

If an investor interrupts you and asks a new question while you’re talking, don’t just go back and finish what you were saying. Recognize that you’ve bored him or her and move on. If you must complete your thought, ask permission. “Do you mind if I just finish talking about the prototype’s nuclear power plant?” you could say. “It’s the key to understanding our whole value proposition.”

Remember that you are on trial, even more than your product or idea. Be conspicuously conscious of investors’ needs, preferences and limited attention spans.

Do all that, and one day you might be a Dragon, too.

Originally appeared on PROFITguide.com