Entrepreneur condemns millionaire Dragons' Den investors and calls for show to be cancelled
Paul Gallagher is a reporter for the Independent and Independent on Sunday having joined the group in 2012. He has previously worked for the European Voice, Daily Mirror and the Observer and been based in Brussels, Belfast, Tokyo and London.
Sunday 21 October 2012
The founder of The Black Farmer food range, and one of Britain's best known black entrepreneurs, has condemned the millionaire Dragons' Den investors as "ruthless and arrogant" and called for the programme to be cancelled.
The businessmen, whose products are stocked by the major UK supermarkets, said the show has been a destructive force for all the budding businessmen and women who have appeared, including those who successfully pitched for investment in their start-up companies.
Wilfred Emmanuel-Jones, who has spent 20 years building his business into a favourite with foodies, and describes himself as "a poor boy, done good", said contestants were being misled in thinking Dragon investment was a long-term commitment.
"How many deals in the Den have succeeded in the long run? Not many. And a lot of the deals the Dragons make will be based on loans or are equity-based, which is the worst kind of finance you can get for a start-up," Emmanuel-Jones told The Independent on Sunday. "There are hundreds of people out there you can get advice from - do not go to a Dragon. I know what it's like to build a successful business: hard graft gets you there, not appearing on a TV show. People would be much better off speaking to their bank manager."
Emmanuel-Jones said: "The Dragons are interested only in a good deal that benefits them, and their justification in being that ruthless is because a lot of the deals go wrong. Like everyone, I thought the show was quite novel when it first came out, but Dragons' Den is a programme that has had its time.
"We have gone past the era of being arrogant, and it's the arrogance of business people that got us into the recession in the first place. More people have to have the courage to start their own business; and one thing that stops people is fear that it's all going to go wrong. The antidote to fear is passion and that drives you through all the hurdles you have to face. We need programmes that inspire people not ones like Dragons' Den, which just aids that fear."
Dawson Sellar and Susan Corrie, a father and his daughter, appeared earlier this month hoping to get investment for their "stylish and relaxing" swinging garden seat and table. Susan said the idea of going on TV "appalled me", but felt their invention would benefit from the publicity. "The opportunity to team up with a serious business mind like Hilary Davey or Peter Jones was also very attractive," she added.
Sharon Wright appeared on the show in July 2009 with her "MagnaMole" product - a plastic rod that threads cables safely through cavity walls. She has been one of many "winners" in the Den whose deal subsequently went sour. She pitched for £50,000, but got £80,000 from Duncan Bannatyne and former Dragon James Caan for a 22.5 per cent stake in her business.
"They were tripping over themselves to invest," Wright said. "I was expecting money, but only found out afterwards that all the investment was in the form of a loan."
Wright said many other "winners" approached her for advice following her complaint to the BBC that she had been misled. She launched legal proceedings against Caan, accusing him of defamation for comments made on his website, but Wright dropped the case last year following legal advice.
Emmanuel-Jones, who used to be a producer and director for the BBC, said there was only one set of winners in Dragons' Den, now in its 10th series.
"It's win-win-win for the Dragons," he added. "They become celebrities, promote their own spin-offs such as books, and have so much extra access to funding as a result of their raised profile. Dragons' Den belongs to the era when money was king and funding and finance was easy to come by. That era is over. In the long run, programmes like this will do more damage than good."
He said the Dragons have been given "God-like status" thanks to a show that has been used as a platform for the investors to expand their own wealth and humiliate their "victims". Even apparent successes, such as Levi Roots and his Reggae Reggae Sauce brand, may struggle to do well in the long run according to the former Conservative A-List candidate.
"People often cite Levi Roots as an example of how the Den works," he said. "But anyone who gets a deal in the Den sees an initial spike of interest in their business. Not long after, you need to return to determination and persistence to succeed. To say Levi is some kind of multimillionaire as a result of his appearance is nonsense."
Tonight's episode will see whether one entrepreneur succeeds in gaining investment having valued his company at £15m and offering just 1 per cent of his business.
'Winners' who lost out and 'losers' who won
David Lees - 2005, plasma TV stand
The 6ft 5in rugby player presented his design for a state-of-the-art plasma television stand. Bannatyne and Paphitis put forward £225,000 for 49 per cent of his business. But half the money was a loan. Lees's accountant said he may as well take out a bank loan - and retain full ownership of his company. Lees gave up the complex negotiations with the Dragons five months later. He has gone on to build a hugely successful business with a turnover of £3m.
Sharon Wright - 2009, "MagnaMole"
The single mother from Scunthorpe impressed the Dragons with her idea for "MagnaMole" - a plastic rod which threads cables safely through cavity walls. Bannatyne and former Dragon James Caan offered £80,000 for a 22.5 per cent stake in her company, Talpa Products. GMTV presenter Penny Smith told Wright: "You'll be a millionaire by the end of the year." Sharon pursued a High Court case against Caan, accusing him of defamation over comments he made on his website, but later dropped the case following legal advice. The investment in her company also turned out to be a loan.
John Richardson - 2011, Natox anti-ageing face cream
Richardson brought his anti-ageing face cream to the Dragons who dismissed it as "poppycock". Worldwide sales of the £90-a-bottle Richibrown Organic Natox nets him £250,000 a month - and Boots began stocking the product this summer. His company is set to turn over more than £3m this year.
James Nash - 2009, cup-a-wine
The idea of sealed plastic cups of wine was dismissed by the Dragons. Bannatyne said there was "no market" for his invention, called it tacky and said Nash just wanted the money for a "good time". M&S disagreed and now stock the product in all its 500 UK stores. Nash had asked for £250,000 for a 25 per cent stake. He found another investor and has since sold almost a million units in the UK. He has since developed and exported machinery to manufacture the product in Australia and South Africa.
Rachel Lowe - 2005, Destination board game
Lowe used her experience as a taxi driver to develop her board game. She took one of the harshest roastings seen in the Den, but Destination London became the number one selling game in Hamleys - outselling Monopoly. Working independently, she negotiated a deal with The Walt Disney Corporation in order to bring their Pixar CGI characters to one version of the game - Destination Animation. At the end of October 2008, she negotiated a deal with Warner Bros that enabled her to produce Destination Hogwarts. Lowe has won many awards for enterprise and business and an MBE from Buckingham Palace.
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