Sometimes, the best way to lead an investor along the trail to backing your company is simply to offer them the scent of success.
This was certainly the case in last night's episode when Toronto's Marlene Cook returned to the Den for a "Second Chance" with the Dragons. She quickly had them panting for a bigger bone than the one they all turned their noses up at in Season 4.
With terrier-like determination, Marlene had built her company Woofstock into "North America's largest festival for dogs," even though she dropped the ball when she first appeared in the Den.
In that initial pitch, Marlene wanted $150,000 for 20 per cent of the new company, which valued it at $600,000. Most of the Dragons found it to be too big a bite and refused. Only Jim pounced on the opportunity, but he wanted 50 per cent. Marlene turned him down.
Ms. Woofstock was back again last night and this time she wanted even more - $200,000 for 30 per cent of the company, which valued it at $700,000.
When the Dragons balked at that, she pointed out they had cleared half a million dollars in revenue with a couple of shows in Canada.
Now, she was lining up corporate sponsors for her next show. She also wanted to run with the big dogs of event staging in the much more lucrative U.S. market.
This caused Kevin's ears to perk up. He smelled big money to be made. Suddenly he became a dog lover and offered $200,000 for half the company. "What you're doing is negotiating with corporations," he howled. "I'm very good at that."
Soon Jim hopped on the dog pile, pointing out that as partners he and Kevin would "do it differently," by which he meant they were going to promote the one-of-a-kind festival heavily around the world.
"I hate to say this, but I think you might have the right partner in Kevin. I think you need ... somebody who's going to be a hard-ass," Arlene said before turning tail and bowing out.
Marlene agreed and took the deal, proving that a company with a desirable product, a ready market, and a bold vision can always catch the Dragons' attention.
Tony Wanless is Certified Management Consultant (CMC) who concentrates on the SME segment. He is a frequent business plan writer, pitch guide, and business plan judge for competitions. His businesses include Knowpreneur Consultants, a provider of Content Marketing strategy and services to SME's, Reinventionist, an innovation consultancy to professionals who form their own independent businesses. He is currently launching tonywanless.com, which provides communication guidance and real-time digital editing services for leaders in the technology, finance and academic sectors.
Tony is also a columnist and blogger for BC Business Magazine and the Financial Post. A former financial journalist and editor, Mr. Wanless has a long history as a communicator, writer and advisor with Venture Capital and angel investors in Canada. He is a frequent business plan writer and pitch guide for technology start-ups and often acts as a mentor and judge in business plan competitions. Follow Tony on Twitter at @reinventionist
Posted on Jan 12, 2012 10:54:07 AM