The Real Dragons’ Den

The widely acclaimed BBC2 series Dragons’ Den conveys the impression that all an entrepreneur has to do to raise informal equity funding is get himself in front of a panel of rich people, and shout about how good his project is. The reality is different. The entrepreneur needs to produce a quality business plan to prepare himself for investors due diligence. And then, where it usually all falls down, he has to find the investors.

Research consistently shows that there are a realistic 150,000 potential investors at any one time, generally entrepreneurs with capital gains to invest. The Cruickshank Report into Competition in UK Banking in 2001 revealed that there are some 20,000 to 50,000 enterprises seeking informal equity funding between £10,000 and £1 million at any one time.

Mediating between these two sides are an estimated 7,000 to 10,000 professional advisors, - accountants, consultants and corporate finance boutiques – who assist with business planning and due diligence preparation. They then attempt to find investors from amongst their own networks.

Source: Business in Hertfordshire – Summer 2005