There are some really toe-curling moments in the Den. Moments during filming when I am almost tempted to rise from my seat (in a dark corner to the side of the Dragons) and to help a struggling entrepreneur by calling out the answer to a question.
There was one such moment when Theo questioned the leading members of the thrill-entertainment group Apocalypse.
Evan will write weekly updates of Den activity throughout the 2009 series.
The group had come replete with a large cast, a loud soundtrack and some garish costumes. They thought they could terrify the Dragons with their choreographed vision of a nightmare, only to find that when it comes to the scare stakes they had more than met their match.
It was all down to Theo's questioning. It wasn't just that the Apocalypse guys couldn't answer his point; it was that he asking a trick question and they didn't appear to realise it.
Here's what happened.
The group came in seeking £200,000 for 20 per cent of their company.
Then Theo asked the group a plausible sounding question: if he was put up £200,000 for 20 per cent of the company he asked.. who was putting up the other £800,000 for the remaining 80 per cent of the company?
Not only could the Apocalypse team not furnish an answer, they looked as though someone had pointed out to them that they had forgotten to put their trousers on that morning. They agreed with Theo's impeccable logic that they should provide the rest of the money themselves.
And Theo increased their dismay by rather cruelly feigning surprise at the fact their pitch was missing £800,000.
What they didn't seem to realise is that cash is not the only thing invested in a company. There is no innate reason why there has to be another £800,000 at all.
The apocalyptic scene could have been over in a split second if one member of the group had thought to say "Don't be silly Theo.. you are putting your £200,000 in for your share of the equity.. we are putting in the creative skills, the idea, and hard work for our share.."
Now the reason why Theo teased them with his line of questioning was that even if the Apocalypse team had not made an error as gross as losing £800,000, they had made a colossal error all the same.
You see, the creative skills, the idea, and hard work they were offering were worth rather little. Yes the group were talented, yes they had good ideas. But if Theo wanted to, he could go out and hire talent like that to generate similar ideas. And if he did so, he would keep 100 per cent of the equity.
So while Apocalypse didn't have to bring cash into the Den in order to earn their share of their equity, they did have to bring something in. Something special.. that a dragon can't pick up on the cheap outside the Den.
It's a lesson for all entrepreneurs. Before a pitch, ask yourself "can the investors replicate my company more cheaply without me than with me?"
If the answer is "yes they can", you won't get an investment. And you might find yourself stuck in something worse than a horror movie.
Last updated: 15 July 2009
Each week Evan Davis gives us his take on some of the key moments from the TV Den.
Evan explains the fundamentals, a full glossary, and links to further resources.
The multi-millionaire investors eager to invest in the Den.
Missed any action? Watch, read, rate and have your say on the class of 2010.
Apply to enter the Dragons' Den.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.