The hit BBC TV present Dragon’s Den permits entrepreneurs and enterprise house owners to pitch their concepts to a panel of buyers (AKA “dragons”) in hopes of securing funding capital.
All of it comes right down to their presentation – the readability of their pitch, the power of their marketing strategy and their capacity to display each market potential and a path to profitability.
However whereas a profitable pitch is a large win for contestants, generally these investments simply don’t prove as anticipated and might fall via shortly – displaying that even seasoned specialists can get it mistaken.
These are notable circumstances of Dragon’s Den investments that failed.
Dragon’s Den funding flops
1. Hamfatter
Investor(s): Peter Jones
Enterprise: Hamfatter is a Cambridge-based pop and rock band, who appeared on the present in 2008 to hunt an funding of £75,000 to fund their album and advertising efforts.
Final result: Though Peter Jones invested within the band, the deal didn’t end in a major return. Their new single “The Woman I Love” entered at 71 on the UK Singles Chart in 2008, although managed to achieve quantity 3 on the UK indie singles chart. The band additionally confronted criticism for the way in which it raised funds outdoors the report label system, with adverse feedback from New Musical Categorical (NME) and The Guardian.
Whereas it seems Hamfatter are nonetheless collectively, the band hasn’t launched a full album since 2011 and their newest launch was a three-piece EP in 2019. Hamfatter songs additionally don’t appear to be obtainable to stream on Spotify.
Lesson: Hamfatter’s story illustrates the challenges and dangers that include investing in artistic ventures, significantly within the music business.
In contrast to conventional companies, the place returns can typically be projected primarily based on extra tangible metrics comparable to gross sales forecasting or goal market analysis), the success of a band depends closely on inventive enchantment, viewers reception and market tendencies – one thing which might be extremely unpredictable and way more tough to realize.
2. Breathometer
Investor(s): Mark Cuban, Kevin O’Leary, Lori Greiner, Robert Herjavec, Daymond John
Enterprise: Breathometer was a smartphone breathalyser designed to measure blood alcohol ranges (BAC). Founder Charles Michael Yim appeared on the US model of the present (often known as “Shark Tank”), searching for an funding of $250,000 for a ten% fairness stake. The corporate was the primary to obtain investments from all 5 sharks.
Final result: The corporate confronted main setbacks as a result of authorized points and issues with product accuracy, which led to monetary losses and a major blow to its status.
The Federal Commerce Fee (FTC) filed a criticism in opposition to Breathometer in 2017, alleging that it had misled clients in regards to the product’s capacity to measure BAC ranges. In consequence, the FTC required the corporate to settle the fees, which included shutting down the app and providing full refunds.
Mark Cuban later informed CNBC that Breathometer was the worst funding deal he’d ever made on the TV present, dropping round $1 million altogether. Whereas Cuban initially thought it was a “nice product”, he additionally criticised Yin for spending time travelling around the globe as a substitute of working. Following the FTC’s shutdown of Breathometer, Cuban stated it was his “greatest beating”.
Lesson: Breathometer’s downfall is a priceless lesson on the significance of product reliability, regulatory compliance and the suitable management model within the startup world.
Regardless of receiving substantial funding, the corporate faltered as a result of not with the ability to ship an correct and dependable product, leading to critical security issues. This could additionally train companies that merely having sturdy buyers isn’t sufficient to ensure success, as entrepreneurs should be certain that their merchandise meet well being and security laws, significantly when coping with health-related units.
Furthermore, sturdy management and a firm tradition that focuses on high quality, integrity and compliance are important for sustaining excessive requirements and going through challenges. Each assist to make sure the complete staff is dedicated to delivering dependable merchandise and adhering to laws, that are vital for constructing belief with clients and reaching sustainable success.
3. Rugged Interactive
Investor(s): Peter Jones and Deborah Meaden
Enterprise: Rugged Interactive specialises in designing and manufacturing interactive exercise gear. Based by Simon Heap in 2009, the enterprise was pitched to Dragon’s Den, with demonstrations on how its gear could possibly be utilized in varied settings, comparable to gyms, faculties and rehabilitation centres.
Final result: Rugged Interactive efficiently secured £100,000 from the dragons, giving them a 30% stake within the enterprise. Nonetheless, just some weeks later, Heap backed out of the deal, claiming that neither Jones nor Meaden contacted him once more. Heap informed The Solar that they “by no means gave a touch about the way it was going to work”.
He additionally added that the Dragon’s Den TV set is merely a studio set and isn’t the way it seems on TV. He described that the pitch room wasn’t a warehouse, there was no ceiling and behind the home windows was “a painted panorama and one aspect of the partitions is lacking for the digital camera.”
Thankfully, Rugged Interactive nonetheless appears to be going sturdy and continues to develop within the aggressive health and wellness market.
Lesson: Simon Heap’s expertise demonstrates that not all offers come to fruition, so entrepreneurs should be ready for what occurs after. A sturdy enterprise continuity plan can guarantee an organization continues to develop and function even when an anticipated funding falls via, detailing methods for sustaining momentum and securing different funding.
Regardless of securing a great funding from Jones and Meaden, the dearth of follow-up and clear communication led to Heap backing out of the settlement. This example emphasises the significance of getting a transparent understanding of the phrases and expectations of any funding deal and sustaining open strains of communication between founders and buyers.
All in all, in case you’re in a position to safe funding in Dragon’s Den, it’s just the start of your organization’s journey. Whereas it can provide you essential monetary backing and publicity, it doesn’t at all times assure long run success.
These circumstances remind us that even with sturdy investor assist, companies nonetheless want to beat totally different obstacles and stay vigilant to realize sustained development and success.
Examine Startups 100 founder Amelia Christie-Miller’s expertise on Dragon’s Den right here.
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