Dragons' Den never fails in its ability to teach aspiring entrepreneurs lessons that are critical to learn.
This evening's episode began with Adam Phillips whose business focussing on prams and other items for children failed my most important rule of investment pitching: Don't make the investors have to hunt for the truth.
Adam's business proposition contained inherent complexity. He was pitching investment in a new start-up whilst running a current business. His new business had the rights to sell an innovative pram that it did not own, nor did it have the rights globally. The patents of which he was so proud were held by an offshore inventor. These were all key facts.
Entrepreneur Doug was a Dragon from 2005 to 2007.
But Adam was also a sharp entrepreneur with a good track record. His prior business appeared sound. He had gotten off to a fast start with his new business and though it was not widely understood even by the Dragons; he had what appeared to be a secure right to an innovative product so long as it met with modest sales goals. Businesses like his have done very well before.
But it was the order and manner of his presentation that lost him the opportunity. Theo said it well when he said that he dislikes misunderstandings; a neatly chosen word. Misunderstandings usually arise from acts of omission, not commission. It's what someone chooses not to say that leaves the wrong impression. And of course this is where Adam failed.
Doug on the programme
But a great pitch is made great by starting with what the opportunity is. If you let investors know the risks up front, it doesn't scare them off; it reassures them that you know the risks too.
If you are crystal clear in what you are and are not offering; it reassures them that you are striking a fair deal and further that you have the capacity to communicate that makes a great entrepreneur great.
In contrast to Adam was Jessica Ratcliffe; whose business offered a clear and quite wonderful opportunity. This is one of those rare moments when, though I agreed with Peter and Theo's assessment of the difficulty of dealing with the physical side of an otherwise internet business; I disagree that she is un-investable. Her business model depends on either an escrow service or a swapping service.
Had she approached me with that proposition I would have readily agreed to some form of investment if she would agree to stick with the purely internet side of the business. After all, it is not as though there is no precedent for such a model: Ebay has done quite well matching buyers and sellers of used goods without taking responsibility for ensuring that those goods are in as good condition as the parties assert.
So Jessica, wherever you are, there's one ex-Dragon who believes in you.
Last updated: 30th August 2010. Follow Doug on Twitter @dougrichard
These are the views of Doug Richard, not those of the BBC
Each week in the 2010 series Julie Meyer and Doug Richard offered their take on some of the key moments from the TV Den.
Week 1: Kirsty, the Best of Britain
Week 2: Called to account
Week 3: Where pitches go wrong
Week 4: A school for entrepreneurs
Week 5: Why evaluation matters
Week 6: When coup de foudre happens
Week 7: The role of an early investor
Week 8: What finishes a pitch
Week 9: Unlocking an investment
Week 10: Lessons from the Den
Missed any action? Watch, read, rate and have your say on the class of 2010.
Other entrepreneurs from this episode:
'Misunderstandings usually arise from acts of omission, not commission'
Missed any action? Catch up and find out more about the Online Dragons.
Apply to enter the Dragons' Den.
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