Raising Venture Capital

Raising venture capital – lessons from the Dragon’s Den.
by Michael Taplin

Is your business growth constrained by lack of capital? Do you really need an equity capital injection?
If so you should have been watching Dragon’s Den, on TV One for the last few months. You would have been able to watch, in multi-coloured embarrassment, virtually every mistake it is possible to make in pitching a business proposition to a potential investor. By now you should be an expert on all the things they do wrong, but in case you missed a few, this summary of the lessons may help.
To emphasize the point, I will pitch it in reverse and put you into the Dragon’s seat. When people approach you for an investment of your cold hard cash, you expect them to:

• Be obsessed about their product to the point of being blind to the need for customers.

• Be avid subscribers to the “better mousetrap theory”.

• Be incoherent and disorganized about their product or business presentation.

• Have taken no action to protect their intellectual property.

• Want you to pay them a salary so they can enjoy their preferred lifestyle without even having to work in the business.

• Be too busy to do the real work of selling.

• Ignore the need to turn a product into a business that will create lots of customers and heavy demand for the product or service.

• Be ignorant about the potential return on investment.

• Have no sign of a business plan.

• Be blind to the need for experience running a business.

• Have done little market or competitor research.

• Want you to take all the risk, at the high-risk end of any business – start-up and early growth.

• Overvalue their idea, and be reluctant to offer an equity stake large enough to compensate for the high business risk.

• Undervalue your business experience and expect you to simply hand over the cash without any strings.

• Give you no credit for being successful. After all you didn’t have to earn your wealth, did you?

• Insult you and be offensive to your colleagues, if you dare to question their pitch.

How many of these errors are you prepared to listen to before you say NO!
If you are still prepared to hand over cash, I suggest you buy a lottery ticket. Alternatively you could suggest that option to the “seeker after funds”. The odds of success will be better for both parties.


The author, Michael Taplin, is a management consultant, business mentor, and contract university lecturer. He left the city office hassle behind 18 years ago, and has run a busy practice from home ever since. He is also admin@jobsinrodney.co.nz so he understands how to set up and operate a web-based business from a rural area. For other useful advice, and to subscribe to our newsletters, check out www.jobsinrodney.co.nz.

Michael is also an enthusiastic supporter of Zeald.com and has recommended several of his clients to get a Zeald.com website.More information on websites here