Research and telephone interviews conducted by Pensionledfunding.com finds that of the 553 contestants who appeared on series one (2005) to eight (2010), only 140 companies appear to still be trading.
More than a third of respondents who have appeared on Dragons’ Den received an offer from the Dragons, but after shaking hands, 58 per cent of these deals fell through – either for contractual reasons or because the Dragon retracted the offer.
15 minutes of fame
Two-thirds of the entrepreneurs said that while taking part in Dragons’ Den has raised their company’s profile, it had not helped them source further funding.
Instead, self-funding has been the working capital solution of choice for most respondents (66 per cent).
Surprisingly, almost all (84 per cent) of those questioned had not even approached a bank for funding before going on the show and, of those who had, 60 per cent, were turned down. Very few seem to have considered the alternative funding sector – including pension-led, peer-to-peer and crowd-sourced funding.
“While programmes such as Dragons’ Den demonstrate the importance of having a clear, well-developed business plan alongside an innovative product or service, they also show just how much owners are forced to give away in return for funding,” says Adam Tavener chairman of Clifton Asset Management, which runs Pensionledfunding.com.
“Start-up SMEs, in particular, are struggling to secure funding capital for growth. These are the very type of companies that are showcased on Dragons’ Den and are the real drivers of our struggling UK economy.”
Guy Unwin of Worcester-based Planit Products, manufacturers of household products, achieved initial success in the Den for Planit’s Toastabags, but ultimately he turned to pension-led funding to boost his business.
“We received a £200,000 offer from James Caan which was later retracted, so we needed to find a form of funding that gave us the working capital we needed to grow the business,” Unwin explains.
“It is hard to understand why funding for SMEs is made so difficult when we are the largest sector of the UK economy.”
According to Tavener, despite the government’s best efforts, alternative funding is becoming the most attractive or realistic way for owners to back their businesses.
“We’ve already completed 2,500 pension-led funding deals to help SMEs back their own companies. With a collective turnover of £1.6bn and providing over 16,000 jobs, these companies demonstrate the strength of alternative funding in the SME market,” he says.
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