Dragons’ Den – Episode 6 Review

Apparently I’m not very good at predicting deals. My last article in which I predicted who would get a deal went flat with me guessing wrong on both counts. However, I can still review an episode, so here we go. Note, if you have not yet watched the episode, do that now, and then come back here.

To start, there was the disaster of the first pitch. While I am not an expert in copyright and trademark law, what the first entrepreneur did was foolish. Branding herself with a name similar to a franchise empire owned by one of the Dragons, and then stressing that point, is a way to increase the risk of investing for any of the Dragons. First rule of pitching to potential investors – don’t piss them off. While I think she has a viable business model, she may be forced to re-brand her business to prevent a lawsuit.

The first deal that was made was pitching to the fact that the Dragons would like the product (which they did) and that there would be a solid business plan behind it, reflecting an accurate understanding of the product and the market (which there was). Schmotoboard is essentially an electronic skateboard or snowboard, and there is definitely some appeal there. Entrepreneur Trevor Bielby worked hard to develop his idea and bring it to market, working part-time on the project with a few other people.

This idea appealed to the Dragons on multiple levels. First, Trevor knew where he stood, why he needed the money, and exactly how much he needed. Second, the product demo sold several of the Dragons to make a purchase even before they heard what the deal was. This immediate interest and ability to make quick sales, coupled with the fact that he already has stores willing to carry his product, makes this a viable business. Brett Wilson was sold on this, and gave him a rounded up amount (by $0.65, to be exact) for 50% of the company, which was accepted, and Jim Treliving joined the deal at the last minute. This was a fast deal, and will likely be successful for all parties.

The second deal was something more along the lines of what I spend much of my time doing – working online on a variety of sites. Scribble Live allows people to create a linear feed of information from a variety of sources, and has already been marketed to various large companies. Their business model is not built on ad revenues, but on subscription fees, which is more stable, predictable, and better paying. They also provide services to customize their product for their clients.

After various squabbling between the Dragons, two offers were tabled. One was between Arlene Dickinson, Jim Treliving, and Kevin O’Leary, giving the full amount ($250,000), but for 50%, and Arlene wanted the right to confirm that the site was as marketable as they were claiming. The other offer was exactly the same, from Brett Wilson, but without the verification. The pitchers, Michael DeMonte and Jonathan Keebler, countered with 30% equity (up from the initial offer of 20%). Brett gave the trio of Dragons the first choice of accepting the counter-proposal, or negotiating from there. However, Arlene, Jim, and Kevin had already agreed they would go as low as 30%, and, rather than risk losing the deal to Brett at that price, decided to take the 30% for their investment.