Deborah Meaden Interview
Brian Perry
06-Oct-06
The Dragons keep providing us with sound & insightful advice on Angel Investing. This issue, Deborah Meaden from BBC’s The Dragons’ Den shares her views on various topics.
Now in it’s third season, BBC’s The Dragons’ Den has added you to their panel of “Dragons”. What would you say has been the biggest surprise from entrepreneurs pitching their investment proposals so far?
On the downside I have been disappointed by the lack of preparation shown by some entrepreneurs entering the Den. Some people seem to know very little about the Dragons, the market they want to enter into, and sometimes even the product itself! This is a big turn off from an investment point of view, as it gives the impression that the person hasn’t bothered to do even basic research. I have however been very impressed by some of the excellent opportunities that have come about as a result of Dragons’ Den, particularly when a good idea is accompanied by an enthusiastic well presented pitch, from an obviously success hungry entrepreneur.
You have clearly demonstrated your abilities as an entrepreneur and an angel investor as a result of your success in business. When looking at angel investment opportunities, what would you say is the one thing that matters most to you?
A good product or idea that is represented by an enthusiastic, high energy individual or business. Honesty is very important also; I can only work with somebody who is honest with me as well as themselves, regardless of how good an idea it may be.
Also when looking at angel investment opportunities, what would you say is the “cardinal sin” that closes the door to your interest in pursuing the idea any further?
Lack of research, honesty and enthusiasm from the entrepreneur. When you are investing in a business, you are also investing in a product and people; you are effectively entrusting someone with your money, and so it is important you have a good working relationship and a good basis of trust with them.
Clearly it is not deservingly so but the reality is the vast majority of angel investors are male. As a successful female angel investor, can you offer any advice to other women looking at starting out?
The advice I would give to a female investor looking to start out, would be to ignore the male/female issue!
In your personal or Dragons’ Den experience, what would you estimate to be the percentage of deals pitched that actually end up receiving the capital they are looking for?
During my time as a Dragon, I would estimate that around 10% of all pitches actually succeed in getting their investment, but this obviously fluctuates according to the quality of the investment opportunities. This generally becomes much higher outside of the den, as opportunities go through a ‘robust sifting process’, i.e. I will only entertain ideas for products that I personally feel are suitable for me!
When it comes to valuations, an entrepreneur and angel investor are rarely on the same page. Entrepreneurs tend to over value their companies and angels tend to under value them (yes, this is a matter of perspective and reality). Are there not certain benchmarks and valuation approaches that can be used to create a middle ground and to help bridge this gap?
The main issue here is negotiation. Often companies that are starting out do not take into account the discounted value for ‘early-starters’, or any potential difficulties that the business may be suffering from. Often general discussion is the key, when the reasons for both sides’ positions are explored, explained and justified or otherwise. It will not surprise you to hear that I consider over-valuation is more prevalent than the other way around, as often people use valuation mechanics better suited to successful mature businesses than start-up, or struggling companies.
What gets Deborah Meaden up in the morning? Are you actively chasing “the next big” or content by continuing to manage and control the companies you are presently involved with?
I have been described as driven, and I have to admit this is probably right. I love a challenge, and I love the feeling of success and achievement, and this means that I will always make sure that my life is full of things that can satisfy this. These can range from making acquisitions, through to seeing my investments flourish, or even taking on new adventures, such as Dragons’ Den. I’ m also currently undergoing a large building project on an historic model farm in Somerset, something that I haven’t done before, so there is no shortage of things to make Deborah Meaden get out of bed in the morning!
