An analysis of Dragons' Den

 

Introduction

Many of you will be familiar with the BBC television series, presented by Evan Davis, which started in 2005 and is still a regular feature on our TV screens. In a cool and industrially styled brick-clad warehouse, the Dragons sit. These Dragons are not the stuff of fairy tales and fantasy (although some of them are known for their fire-breathing qualities); they are a panel of businessmen and women, known for their wealth and commercial success, who listen to pitches by start-ups, companies and budding entrepreneurs who wish them to invest capital into their businesses. The Dragons in return for their investment are offered a percentage stake in the pitcher’s enterprise.

How the pitch, the subsequent grilling (more akin to what might be experienced by a cheese toasty), and negotiations unfold makes for melodramatic episodes full of highs and lows. Whether it is the punctuated music which accentuates the awkward silences, or the slight squint in presenter Evan Davis’ eye - you know you’re about to be taken on a rocky ride; and you’re the one who is safely behind a glass screen.

Dragons’ Den is the publicly consumable way to watch investments, growth and pitching for business on British television. A dramatised version - with highly strung characters, tense drama and some calamitous fails - of what many business people have themselves experienced behind closed doors.

About Merchant Money’s Dragons’ Den Series

As lenders to SMEs and as a business ourselves, Merchant Money understand the kind of experiences and hoops businesses must jump through. As this television is so widely viewed by the public and entrepreneurs alike, we thought it pertinent to create a series of blogposts which analyse just how valuable this dramatised version of business is (although we imagine some of our audience will argue that their experience of doing business has been far more dramatic). We intend to break down the programme (which is made up of 12 series in total), looking at which Dragon invested the most, which investments were the most likely to get selected and why, what the successful businesses eventually did with their ‘winnings’, and other factors along the way which we will ultimately analyse and filter into what would be the perfect pitch if you were to pitch your business on the show.

Dragons' Den: The Raw Facts

Dragons' Den is a series watched by millions - like its talent show counterpart XFactor as a platform for aspiring musicians and performers. Our first post (that’s this one) looks at the raw data; how many investments there have been on the show, which series you were best off appearing on if you wanted a Dragon to invest in you and how many of those who appeared on the show did in fact succeed - is it really an 'easy' way to gain investment? Later on we'll also take a brief look at each of the Dragons and their characteristics.

How many Businesses Appeared on the Show?

Out of 11 (and a half) series a total of 828 businesses pitched on the show. But the success rate gaining investment did vary....

Number of Investments on Dragons' Den

There were 152 investments in from series 1 to 12. On average, there are 1.5 deals in each episode and 13.7 deals per series (weighted average - see chart 1). Chart 1 shows how the number of deals per episode varies through time. As we can see, during the first three series the average was around one successful pitch per episode. This trend changed after series four when the number of deals per episode got closer to two. This behaviour has been pretty consistent since then, with two exceptions: season five and 11 - which coincides with when Theo Paphitis, one of the biggest investors, left the show. This will be discussed in a future post.

What % of contestants were successful in securing investment

18.3% of the contestants which appeared on the show were successful.

The Dragons

Table: 1

Series 1-page-001

Series 1-page-001

Peter Jones D.O.B: 18/03/1966 (48) Twitter: @DragonJones

While we’re not here to tell you the whole history of these dragons, we will tell tell you a bit about how their background has contributed to the successful entrepreneurs they are today. Peter started his first business, a tennis academy when he was just 16 - he played at a county level but his intentions were always entrepreneurial rather than to win Wimbledon.

In his 20s, Peter had started a successful computer business manufacturing PCs under his own name. He doing well for himself without a shadow of a doubt; he owned a series of nice cars and his own house and was married by 21. He owned his bar-restaurant in Windsor which he has styled on the bar in the film ‘Cocktail’ starring Tom Cruise. By 28, in the recession of the late 1990s, things had started to unravel. He had to sell his bar and after a number of creditors to his computer business went bust, he lost his house and had to move back in with his parents. He lost £200,000 when he sold the bar. His upturn in fortunes occurred when he joined a large corporation, Siemens Nixdorf, in a bid to get his career back on track - and within a year he was running the UK division. In 1998 he founded Phones International Group (which today operates under the brand name Data Select) - it made £14 million of sales in its first year of trading and £44 million in the second. In 2002 Jones was recognised as Emerging Entrepreneur of the Year by The Times/Ernst & Young - and his telecoms group was identified as 13th fastest growing business in The Sunday Times/Virgin Atlantic UK Fast Track League Table in 2003.

But what is Peter like as a Dragon? Peter is unflappable and won't tolerate any indecisive um-ings and ahh-ings. He has slightly more humility than his peer Duncan Bannantyne and he tends to diffuse awkward business pitches with (what perhaps he considers) a witty retort. On his profile on the BBC he is described as the 'fiercest Dragon in the Den', but while you'd never get away with telling him porkies, he recognises effort and will be vocal about positive initiative and business endeavour that he sees.

Duncan Bannantyne D.O.B: 02/02/1949 (65) Twitter: @DuncanBannantyne

Duncan is probably the most acerbic Dragon in the Den. He's not to be messed with. The strong Glaswegian accent strikes fear into the heart of any potential investee - and he will call a spade a spade. If your pitch isn't clear his steely glare will make you tremble with fear. It's like a visit to the headmasters office with Duncan - you don't want to get on the wrong side of him - after all we learned that he was once dishonorably discharged from the Navy after threatening to throw an officer off a boat landing jetty. He loves being an entrepreneur and he was one of the richest Dragons until a rather acrimonious divorce. His frosty disposition seems somewhat softened when one learns that his first step onto the entrepreneurial ladder was through the purchase of a £450 ice cream van. After selling that for £28,000 he went on to found a care home business which ultimately sold for £26 million in 1996. Since then the name Bannantyne has gone on to become synonymous with health clubs, bars, hotels and property.

Rachel Elnaugh D.O.B: 12/12/1964 (49) Twitter: @RachelElnaugh

Rachel Elnaugh is not the quite the household name that Duncan and Peter have become. The die-hard Dragons' Den fans will recognise Rachel from the early days of the show; series one and two. Aged 24, she founded Red Letter Days - a gift experience voucher company. At its peak the company grew to a £17.5 million turnover, which resulted in several awards for Rachel, namely being named a finalist in the Veuve Clicquot Businesswoman of the Year (2001/2002) and Ernst & Young Entrepreneur of the Year. If you Google Red Letter Days now however, you'll notice something odd, it's actually owned by Theo Paphitis and Duncan Jones. The story goes something like this: Red Letter Days went into administration in August 2005 (while Rachel was appearing on Dragons' Den) which is when Theo and Duncan made a decision to purchase Red Letter Days (when they were intoxicated, allegedly). One can understand just how much pressure Rachel was under to step down from the Den after that; two out of her five fellow Dragons had essentially bought her failed business - not essentially - had! Her position became untenable - the BBC couldn't be seen to be showcasing a 'failed' businesswoman on their show about businesses. Relations also soured between Rachel and the other Dragons and she stepped down from the programme at the end of series two. Rachel seems to take offence quite a lot, or maybe it's that a lot of people insult her.

Dough Richard D.O.B: --/08/1958 (56) Twitter: @DougRichard

Doug Richard, like Rachel Elnaugh, only appeared on series one and two of Dragons' Den. He is the only Dragons to have never invested throughout a series (series two). Doug describes himself as an 'early stage' investor - and much of his experience prior to joining the show centred around this. He's started two of his own businesses and made his money buying and selling software companies. Since leaving the Den he has gone on to helping, promoting  and developing entrepreneurs and entrepreneurship - in the spirit of Dragons' Den, if you will. We only have - really - one series to observe what Doug is like as an investor and to understand some of his characteristics. He's the kinda guy who wouldn't look out of place in a corporate north American boardroom table (he does hail from California after all). His approach is generally emotionless and hard facts. While you could say that this applies to most of the Dragons (after all they're not investing with their hearts) he does take himself rather seriously and isn't afraid to go into a fire fight with another Dragon - bravely - as he does here with Duncan.

Simon Woodroffe D.O.B: 14/02/1952 (62) Twitter: @Woodroffe_Simon

Simon Woodroffe is the hippy entrepreneur of the group, if that juxtaposition is such a thing. He began working in the music and entertainment industry designing and staging concerts for the likes of Madness, Rod Stewart, Stevie Wonder and George Michael. He made his money in raw fish, opening the successful chain of conveyor-belt eateries we know as Yo!Sushi. He launched Yo!Sushi without any start up capital, eventually selling his controlling interest in a deal worth £10 million. While he now owns none of the business he still earns an annual 1% royalty of gross sales in perpetuity. He also has been known to wear yellow shoes on the programme. But what is Simon like as a Dragon? The slightly croaky voiced investor always goes with his gut instinct, he tends to invest in people - and has admitted to investing with emotion. He is a listener and does give those who get the jitters in the Den the benefit of the doubt - more so than his fellow Dragon contemporaries. Having worked as a designer for 15 years, woe betide you bring a product to the Den which isn't polished and aesthetically pleasing. He was only in Dragons' Den for one series.

Theo Paphitis D.O.B: 25/09/1959 (55) Twitter: @TheoPaphitis

You could say Theo Paphitis is one of the more approachable Dragons on the programme. He's the lovable one who's always cackling in the background and referring to his wife, who he dubs "Mrs P". He doesn't mince his words, and is the master of the put down - he once said: "I'd rather stick pins in my eyes than invest in this". Say what you think why don't you Theo? He has also been known to put a lot of products to the test: some call him 'the destroyer'. He stays humble throughout his nine-series stint in the Den and is a consistent investor throughout. He has earned his fortune through resuscitating failing businesses including La Senza, Ryman, Partners the Stationers and Stationery Box - you could say he has a thing for pencils - and lingerie-  as he launched Boux Lingerie and Nightwear in 2011.

Deborah Meaden D.O.B: 11/02/1959 (55) Twitter: @DeborahMeaden

Deborah has experience in the leisure and retail trade but her fortune was made with Weststar Holidays as managing director. The holiday park operator found themselves doing pretty well back in 1999 and to secure her future she led a management buyout, eventually selling the majority of her share of the company in 2005 in a £33 million deal. She kept a controlling 23% of the businesses but when Weststar was finally sold off to Parkdean Holidays for £83 million she sold of her bit too, netting her roughly £19 million. Deborah is pretty strategic and knows her priorities: she can fall in love with something but she won't let it cloud her judgement. She's also been called the 'arch-interrogator' - the level of detail at which she asks questions is unparalleled. She's stubborn and competitive and also has her idiosyncrasies; Theo states that he knows exactly when Deborah's 'in', when when she rubs her fingers together.

Richard Farleigh D.O.B: 09/11/1960 (53) Twitter: @FarleighRichard

You'll know this Aussie entrepreneur from series three and four of Dragons's Den. He 'retired'  aged 34 (and proceeded to "hang about Monaco in a Ferrari and a boat" - his words not ours!) but joined the Den in 2006 and at that time was worth a staggering £66 million. He started off his career as an investment banker but later set up a company which tried to discover commercial applications from academic research at Oxford University. He later sold this company for around £20 million. As well as being an entrepreneur he also (again, his words not ours) saves like a squirrel. In case you were wondering, he also used to go out with the original perfect housewife, Anthea Turner. But what is he like as a Dragon? He gives credit where credit is due - with an admiration for a good pitch and an investable pitcher. He certainly isn't the nasty of the Den.

James Caan D.O.B: 28/12/1960 (53) Twitter: @JamesCaan

James joined the Dragons' Den panel in 2007, staying for four series in total. He seems quite softly and kindly spoken but don't underestimate him; he's astute and can sometimes be quite harsh. He really dislikes it when business owners either over or under value their company - so don't do it! His calm demeanor seems reassuring and has been labelled as the 'quiet assassin'. Outside the show he's been a professional investor, with which Evan Davies credits him with bringing a level of professionalism and sophistication which has raised the other Dragons' game. Outside of the Den he 's known to wear bizarre clothing. He earned his stripes (and his cash) in the recruitment industry - setting up his own business in 1987.

"Hi, I'm James, I'm bored. And I'm out."

Hilary Devey D.O.B: 10/0/1957 (57) Twitter: @HilaryDevey

Hilary Devey, the husky voiced entrepreneur which made her mark in the freight business, joined Dragons' Den relatively recently in 2011. She went on to revolutionise the freight industry with her company Pall-Ex. But it hasn't been all plain sailing for Hilary and Pall-Ex. Hilary suffered a number of setbacks which meant that Pall-Ex didn't really kick off until 1996. She's gone through her fair share of  family difficulties and personal problems and she's been refused funding by the banks (clearly she knows how some of the Dragons' Den contestants feel). She recounts that one year she and her son had to forgo Christmas dinner after she prioritised paying her employees over herself. This Dragon is tough. As a Dragon she can get angry so makes sure you've got your facts and figures straight, you don't want to waste her time.

Kelly Hoppen D.O.B: --/07/1959 (55) Twitter: @IMKellyHoppen

Kelly is the Goldilocks of the Den - a Goldilocks who has amassed a vast interior design empire under her, anyway. She's the Dragon who wears her heart on her sleeve and will always give any  business entering the Den a heart-felt opinion. As you'd imagine, any product which is below par on aesthetics is not going to pass the Kelly Hoppen test. You may as well pack up your pitch and leave. She's knows a thing or two about marketing having built the brand, Kelly Hoppen Interiors. She can count celebrities among the likes of Victoria Beckham, Madonna and Elton John as her clients and she once said she wouldn't work work on a job for less than £300,000. She's certainly not the richest Dragon but having come had an affluent start in life, she's said she's never had to worry about money issues.

Piers Linney D.O.B: 15/02/1971 (43) Twitter: @PiersLinney

Piers in the youngest Dragons of the programme. Like most of the Dragons his entrepreneurial spirit shone through at an early age - at 13 he cut out his local corner shop when he decided he wanted to do his paper round, going straight to the wholesalers, building it up and then selling it off. His career began in the City in investment banking before he  left in 2000 working as an adviser, director, investor and founder for numerous technology, media and telecommunications businesses. As a Dragon he's charming and straight to the point, you'll find him measuring up arguments and considering all opinions.

What's Next?

So we've looked at an overview of of the activities, Dragons and investments in the Den. In future blogposts we'll be drilling down even further into how much each Dragon invested, who invested the most, trends about who invested with who, and the breakdown amount of equity which was requested and / or given up.

In the meantime...we're out.

 
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