Rachel Elnaugh Interview
Brian Perry
06-Jun-06
Rachel Elnaugh, from the hit BBC television programme The Dragons’ Den shares her views on angel investing and gives insight in to what she looks for in a pitch.
As one of the Dragon’s on the BBC’s hit television show, The Dragons’ Den, what would you say is the single largest problem with entrepreneurs when trying to obtain investment capital?
It’s massively difficult to obtain investment funding, which is why programmes like Dragons’ Den are so popular. What entrepreneurs need to understand is that angel investors are not purely driven by money – some are philanthropic, and simply want to help a business get off the ground, and are prepared to wait for their return. Which is why I think demonstrating an absolute, personal commitment to your business is key. And knowing it inside out.
In your experience as an angel investor, what are some of the things you initially look for in an entrepreneur’s investment proposal / pitch that make you want to pursue it to the next level? What are some of the “red flags” that make you not want to pursue it any further?
I look at the person first. I will never go into business with someone I don’t instinctively like. Of course, sometimes my instinct is wrong – proved on Dragons’ Den, when one of my investments stabbed me in the back and ran to the tabloid press! I look at the product too. And determine whether the product is good enough, or the service you want to provide, is at the very heart of the company. Someone who is just trying to make a quick buck with a rubbish product is an instant turn—off. I don’t look at wheeler-dealer types! Alarm bells ring when I encounter arrogance, lack of respect and dishonesty.
When an entrepreneur is pitching their idea, how important do you feel it is for them to have a company with existing revenues vs. a brand new start-up with none?
In my experience, most companies who think they need investment actually don’t. If more people put the same kind of effort into creating and landing deals, as they do into looking for investment, the investment landscape would change immeasurably.
What is your idea of “the perfect elevator pitch”?
If you can’t sum up your business and what it does in two sentences, then don’t bother.
Do you have a “rule of thumb” for how much equity or return on investment you are looking for to get involved in any one particular project?
This is a personal thing. For me, I just want to know that I’m going to see my money again!
In your experience as an angel investor, what key aspects of due diligence are you the most concerned about prior to closing any deal and making your actual investment?
Most people believe due diligence is just a financial thing. With me, it’s personal. If the personal dynamics don’t add up, then I walk away. Quickly. And if someone has obviously lied in their initial pitch…you simply don’t continue.
Some angel investors and VC’s are saying the big returns of the DOTCOM era are gone forever whilst some are saying we are starting to see signs of a return. What are your thoughts on this?
The dotcom boom was something of a mirage. But I still think there are massive profits to be made in this sector. But you have to look broader than that.
Putting good products and excellent services at the heart of your business is what matters, not necessarily the sales medium.
As both an entrepreneur and an angel investor, where do your ambitions currently lean towards and what does the future hold for Rachel Elnaugh?
I am launching my new company – The life Changers – at the end of June, with the release of the first in a series of motivational business CDs called Escape The Rat Race. It aims to help people who are stuck in a 9-5 job and don’t have faith in their own abilities to pack it in and work for themselves. It’s frightening to say “I’m leaving” but it’s a terrifying thought that you will be 90 years old and wishing you hadn’t spent your entire life working for someone else, at their beck and call, when you could have been enjoying yourself!
