Posts Tagged ‘Investing’
Try, Try and Try Again
Colm of Curtain Cosy infamy came back to the Den with his Roof Chute idea. The Curtain Cosy featured last year. It was a shelf for propping up your curtain so the heat from your radiator isn’t blocked by the hanging curtain. It looked awful and got pasted in the Den. The Roof Chute didn’t get a great reception either. But I really admire this guy and his tenacity, and he may very well hit on a lucrative idea. Keep trying Colm and I hope you return to the Den.
A White Witch and a Stitch & Bitch
Ruth Ruane of White Witch just got her valuation wrong and so her presentation never got going. Also beware of forecasting sales growth of more than 20% per annum. Ruth said she was going to grow from €27,000 revenue to €250,000 – just not credible and so the Dragons backed out.
Sherry Nugent was brilliant. It is a pity there was only a small clip of her on tonight’s show. She did a really good presentation. She was in command of her facts and figures and publishes a really high quality magazine for quilters. It all appeared far too niche for us Dragons, but I learned something. In the US where women gather to quilt the term is a “stitch and bitch”. So they gather for a good old gossip but also create a beautiful quilt. For all the guys who prop up the bars of Ireland moaning about everything, isn’t that a good idea? Why not be productive and make something while you are having a whinge.
Chocolography
Sandra Stanley had a great presence about her and did a super job presenting Print Delicious, a business that can print your logo or photograph onto chocolate. I suspected she was from the hospitality sector with her easy, confident manner and I was right, she is a publican. Great business. Will do well for her but is not an investment I believe you would get a big return on.
Marketing Costs Were Depleting Profits.
Peter Cummings and his Paint Brush Holder were shown the door very quickly by the Dragons but not before he said something very important. He had already tried selling his product but it hadn’t worked out, because he said the cost of marketing the product was eating into his margin. In my next blog, which will be up on Monday morning, I am going to talk about this. Getting a product into shops is hard work, but getting it picked up from the shelves and brought to the till is the real challenge and that is all about marketing.
The main thing is to manufacture it for very little and have a very large margin on it. Then, and only then, can you afford to market it.
One Week Closer to the Recovery…
Good Morning, the start of another week and a week closer to the recovery that will emerge in our economy. None of us are sure will it even get worse before it gets better but the inevitability of the economic cycle means we will recover. When? No one actually knows, the only definite thing is we get closer to it every day. For most businesses the goal for the rest of this year is to stay in the game, hold your breath and tread water.
In advance of Programme 2 this Thursday at 10:15pm on RTE 1 here are some tips about pitching a business idea.
How to Pitch
This is the question I am most asked by people with business ideas or an invention. What is the best way to pitch or present it?
In fact this is how I came to the whole world of venture capital. I used to coach people who were about to make pitches. Enterprise Ireland asked to about ten years back to do workshops for their HPSUs, that’s, High Potential Start Ups. When the dotcom boom came along I found myself working with a lot of nerds with high tech’ ideas. It was Hi Tech but a low, low standard of presentation. Rather than just coach them I then started to invest a little for a slice of action in the better ones and I had an almost 100% success rate. Then people started coming looking for me.
The Dos and Don’ts of a Good Investor Presentation
There are key elements to a successful pitch and for the life of me I can never understand how people leave them out. It happens all the time in the Den also.
What is the ROI?
Don’t be fixated with explaining your idea or proposition. Your emphasis should be on the ROI, the return on investment. It is not that you are looking for €100,000 that is important but rather what the potential investor will make, say, €600,000 from the investment in the next 3 or 5 years.
Here’s the golden rule. If you want an investor to put money in you have got to tell them when, how and how much they will get back. It is referred to in venture capital as the EXIT. Sadly you will see in this second series of Dragons’ Den hardly any of those pitching in the Den offered a clear and credible exit strategy. BIG MISTAKE
So your pitch should consist of, best in this order;
- Idea/Concept
- Route to market
- EXIT & ROI
- Solid Sales Forecast.
Avoid Chinese Glove Syndrome
Finally in dos and don’ts let me address the other frequent mistake, the absence of a Solid Sales Forecast. If there is one thing I hate in a pitch it is, what we call in venture capital, “Chinese Glove Syndrome”.
In the 80s Michael Jackson popularised wearing just one glove. So let’s sell a single glove to everyone in China. That’s more than a billion gloves and we will make one euro on every glove and we will be billionaires.
It is absolute madness but that’s what people always do. And their stupid accountants put this in business plans. Last week Herbie Porsche, what a name, had the idea for a Toilet Pipe Cover. Now he didn’t even have a business plan but he had an ingenious idea. But people get carried away. Imagine if Herbie had gone on with the following poppycock the style of which you hear in almost every pitch these days. “There are 220 million toilets in the UK of which 55% have a soil pipe going into the floor and if we capture only 5% of that market selling our Toilet Pipe Cover to each of them at a profit of £3 sterling, means we will end up with profits of £363m or a cool Four Hundred Million Euro.” Absolutely bonkers but that is the type of thinking people bring to forecasts.
Give an Investor your Solid Sales Forecast
The alternative and what investors want to hear is Solid Sales Forecasts. We have spoken to X retailer and they said they could sell 7,000 units this year. If that can be backed up with an order or a letter giving even half of a commitment it will impress and is so much better than the Chinese Glove approach.
Talk to you next immediately after Thursday Night’s Show
My next Blog Update is Thursday at 11:15pm when I will give you the inside story on the pitches that appear on Thursday night. I can tell you it is a great show and watch out, Sarah may be about to make an investment or does one of the other Dragons swipe it out from under her nose?
Also below is the article Herbie had in Yesterday’s Sunday Independent.