The truth about Dragon's Den

Following on from my previous post, the most misunderstood of all forms of business funding is Venture or Angel finance - and I'm afraid that Dragon's Den must take a large part of the blame for this.

At a recent networking event out of 30 delegates no fewer than 4 made a beeline for me to discuss an 'investment opportunity' (why does the word opportunity now make me shudder?) for one of my Venture or Angel contacts.

Similarly, the pages of business forums are riddled with posts along the lines of 'I have a unique online concept and just need £100,000 to launch it'. The responses will either take the form of (faux Scottish accent) 'so you're valuing your unlaunched business at £ 1 million - I'm out'  or a more practical, but ultimately equally useless 'All you have to do is contact the BVCA'. BVCA is the British Venture Capital Association - approaching them for investment in your 'unique new online concept' is about as appropriate as contacting Ford Motor Company in Detroit for a new filler cap for your Mondeo.

My role here isn't to tell you how to put a VC proposal together - I'm not a VC broker & that is their job, but to help you put this market in perspective here are some pointers:

• If you email your proposal to Peter Jones it is highly unlikely he will look at it. I don't know his specific stats, but  a safe assumption is that fewer than 1% of proposals to hit his inbox will be read beyond the first page (not by PJ). Of that 1% less than 1% will make it to any sort of serious consideration.

• VCs don't negotiate - at least until the very last minute. If you put a silly valuation on your business they will just move onto the next one.

• Most VCs have sector specialisms so if you want your retail/cafe business to get the right audience, you'd best find out which VC specialises in that sector.They will use their experience to question your assumptions.

•  VCs make big losses and big profits. They will aim for a return of something like 5 times their investment from your business.

• VCs buy primarily into people and businesses, so if you can turn your concept into a business - however small, you will dramatically improve your chances of investment.

• VCs don't just give you money and walk off, they expect to have feedback and input to your business.

Really what this boils down to is you need to ether do a hell of a lot of research before punting your deal around the market or you need to tap into some experience and knowledge. Just like business really!

Oh - and the truth about Dragon's Den? It isn't real. It is a cross between reality TV and Sitcom.