Dragons' Den Special Holiday Episode
I watched the holiday special episode of Dragons’ Den, and it a great way to end Season 4. In case you’re wondering, Season 5 will start January 6, 2010 and looks to be even better than Season 4, and I’m really looking forward to it.
There were, as usual, two deals on the Den. The second was a case of Brett Wilson helping to boost creativity and dreams on the part of two girls, 11-year olds Abby Somer and Megan Boudreau who invented a game called Let’s Dance Board Game and came on the show asking for $10,000 for 50% of their company. Rather than invest in the abilities of the two girls to sell their product, who had yet to sell a single unit, Brett gave them $500 to get them started. If they made money within a year, they could pay him back, but if not, he would write it off. This went against the rules of the Den, which state that you have to get all the money you ask for in order to get a deal, but hey! it’s the holiday spirit!
The other deal, which actually happened first, was presented by Allan, Patricia, Melissa, Jordan, and Amanda Kotack for their company, Cosy Soles. Retailing at about $40 a pair, the family developed the product in response to a need for heated slippers, and have created a second product, heated mittens, which retail at about $25 a pair. Their business was growing, with a steady increase in sales over the last couple of years.
They came on the show asking for $150,000 for 35% equity. The problem, however, was not in the valuation, which seemed fairly accurate, but in the fact that none of the 3 children would get involved full-time in the business. This aversion to taking risk drove most of the Dragons away from the deal. It was as though the family wanted someone to come in and take over the business, and pay them a salary for their work.
Brett did give them a deal, but on different terms. He gave them $30,000 in exchange for 10% equity in their company. The balance of the money, $120,000 was given as a line of credit to help them offset their expenses in the short term. He made a clear point, however. The family would not be getting his time.
The lesson here to future entrepreneurs – going on Dragons’ Den is not like going to the bank with a pitch for a business. At the bank, all you want, or can expect to get, is money. On Dragons’ Den, the coveted deal includes expertise.