My story with Dave, the kids, Cooper, VW's & rugby

Dragons Den Rip Off

My illusions have been slightly shattered when I read this weekend’s article on the Daily Mail about the experience that Sharon Wright, the inventor of the MagnaMole, had at the hands of Dragon investors Duncan Bannatyne and James Caan. It’s one of my favourite TV programs as I love seeing all of the ideas people have for businesses and I love the concept of angel investment which can make a real difference to small businesses starting out. Bronco also had a client scoop the largest investment in the Den back in 2007.

Obviously the Daily Mail article is just one side of the story, but I don’t see any reason that would lead Sharon Wright to tell her story and write a book, unless she didn’t have good reason to expose the Dragons for who they really are. This story could really damage the reputations of Bannatyne and Caan and could lead to future issues in the way people do business with them.

Sharon had invented a new device that would help electricians and workmen take cables through cavity walls easily without any risk of electrocution. I remember when the program aired where she pitched to the Dragons last year as she was so confident and I wished that I would be able to be so calm and collected under pressure. What makes Dragons Den quite appealing to watch is to see business people squirm in the den as they forget their pitch or mess up their sums but Sharon though did an amazing job and was brilliant. All the Dragons wanted to invest in her and instead of getting a £50,000 investment for 15% she ended up with £80,000 for 22.5% shared between Duncan and James. There are a few months between the pitch and when the program airs which is when the deal is finalised which is where it all started to go wrong.

I can kind of imagine this happening, that a few weeks after filming she was asked to come to London with a meeting with James Caan, only to be told when she got there that he was busy. (that’s not a very good way to do business!) Later she went to meet Duncan who apparently was much friendlier and then the pre-contracts came out, and the £80,000 was actually a loan and not an investment. It sounds like Sharon was out of her depth on the contractual side of things and in hindsight should have involved a lawyer but signed up to the deal. It turned out that she received very little help from the Dragons, paid over the odds for things like a website through one of Caan’s referrals, and ended up having to pay £3000 a month for services such as use of Caan’s PR company. Sharon only ended up getting £26,500 from the Dragons of which she has paid back £22,000 as well as losing a whole load of weight due to an eating disorder and suffering a nervous breakdown.

This is no way to treat a business owner who has a very viable product that you have invested in and also have taken a substantial chunk of the company from. I forgot to mention that in the contracts it stated that one of the Dragons would be appointed Chairman so would have the casting vote…what!

What has Dragon’s Den turned into, or has it always been the same… rich investors, sat on a big pile of cash, waiting to pounce on the latest new idea, to take a big share of the equity, in order to get richer for not much effort. In a way they are preying on people who are often at their most desperate when they get into the Den as they have given a project their all, mental and financially, for often a long time and are looking for help.

Anyway it must be about time to tune into Episode 6 of this current series!

12 Comments

  • Carla

    It’s pretty shocking isn’t it? It must be scary enough to hand over equity and to put your trust into other people but then to have it all go wrong – allegedly – must be heartbreaking. But then, Dragon’s Den is just the business equivilent of X Factor so not sure how seriously any entrepreneur should take it.

  • Kean

    As I’ve read more into it I do think Duncan is certainly not to blame so much in this. The problems do seem to be coming from James Caan’s side. With such business practices he should certainly be dropped from the next series as it damages not only him but also the show, though I must admit this isn’t the only issue I have with the show recently.

    I wonder if James Caan made his fortune with such underhand business dealings. The only mark I see against Duncan is how his visions and contracts of the investment and those of Caan’s could be so different, you’d maybe imagine he was aware of what was going on, but so far I think the large majority of the blame rests on James Caan’s shoulders

  • Skott Bentley

    i have heard he is being dropped for the next show anyway! it is a tv show afterall and they arethere for the glory in every way and not for business. TV is a lure for the rich as well as the poor.
    The reason Doug Richards left the first series after a short spell was as he confesses “there was no money to be made”
    I hope sharon works it out.

  • David

    I have to say that’s pretty shocking, I’d not seen about that anywhere. DD is one of my all time favourite programmes, but having read that, I’ll be watching it with a grain of salt. The dragons give the impression that they will be hands on, it’s a real shame they’re not.

  • Wards

    Ok – just a little beef I have with this ‘victimised’ persona – People going on Dragons Den are doing it to create a huge injection of PR to use as an advantage for business start ups, right? Why else would you shout your invention / business idea from the roof tops?

    This is the sole selling point of dragons services opposed t traditional business angels type venture capitalists. Generally, to get that much exposure on TV costs a business £100,000’s for 30 secs and she got over 5 mins! Perhaps if they altered the shows business model slightly they could improve a business startup campaign. Increasing the frequency of follow up / ‘see what they did’ shows cthese ould help business startups. This use of repetition and branding exercise could leave deeper impression on the minds of the audience and make that idea much more recognisable and memorable!

    So, on the flip side – she got quite a good deal! Does it cost money to go on TDD?

    How can a venture capitalist invest more than 500+hrs into a business startup? They would no longer be able to call themselves that job title! They open the doors and turn on the lights…that’s it! Oh yeah – and fork out a load of wonga!

  • Wards

    Hahaha Carla , your x factor comment just landed me with this thought:

    And the latest Dragon to enter the Den is ….

    …..Sharon Osborne!

    How amazing would that be???

    Ok, slightly on/off topic – I really need to vent now..while this topic is hot!

    DaveN …You and your colleagues work online quite a few hrs a day…I just gotta ask:

    Do any of you guys receive PPC ads of Jimmy Caan and his Total Business Mastery Seminars?

    OK this is beyond a joke! (I work 8hrs a day online) For the last 5 weeks, and on pretty much every unrelated site that I come across (be it wedding, sorbet mixtures or medieval jousting) I see at least 3 PPC pic ads or PPC text ads of James Caan staring at me like a possessed version of the Mona Lisa which is affecting my daily expression and features and forcibly altering them into something somewhat more akin to a famous Edward Munch painting.

    It’s sending me mad! The course finished a week or two ago and still James Caan impregnates his ‘mastery’ into my done-in skull. I will not be brainwashed!

    I have emailed the associated PR company and James himself and told them how much money they must be wasting on this and to… “sort it out!”

    Tumble weeds……I have not – as yet – received a reply.

    Has James really got more money than sense? Or does he have utter faith in these marketing strategies to truly think that PPCing on a ‘how to grow water cress’ post on a frugal gardening site would yield some serious interest?

    At first I thought I had a virus and that this was a malware attack! Errr. nice one! But then someone told me that PPC ads are now hunting the user individually based on their cookies or search trends- can anyone shed some light on this? Otherwise I am supporting the cause by contributing as many clicks as possible!

    Has anyone else experienced this?

  • Wards

    ooops meant Becky, not DaveN! I forgot where I was for a minute there!

  • Wards

    To prolong the monolgue… I think the answer is found here: http://www.oldwelshguy[dot]co[dot]uk re. Googles new page rewriting patent

  • chris

    I have long thought that DD was no more than a vehicle for the dragons own self gratification and this has now convinced me to keep away from it from it, even though I have a sound electronic device at the prototype stage.

  • Wards

    You might want to get view points from other businesses on the show:
    http://www.dragons-den.org.uk/list.html

  • Ranjit Sen

    I think it would be a great challenge for dragons to invite CHARITABLE ENTREPRENEURS to bid for good,efficient and worthwhile charity.

  • Seo Dubai

    In 2006 nearly 80% of the deals were never finalized. It is a TV show… lets leave it at that.