Thursday 15 November 2018

'We're in' - Dragons' Den pitches show how far economy has come in last eight years

Businesswoman Chanelle McCoy will become the third female Dragon in the long-running series which has reflected the lows and highs of the Irish economy
Businesswoman Chanelle McCoy will become the third female Dragon in the long-running series which has reflected the lows and highs of the Irish economy
Richard Curran

Richard Curran

ON Sunday night, 'Dragons' Den' returns to television screens in what will be its eighth series on RTÉ. It probably reflects the growing appetite in Ireland for learning about business and starting up your own that it is the second-longest running 'Dragons' Den' franchise in the world.

Since the concept first emerged in Japan, where it was called 'Money Tigers', local versions have been produced in nearly 30 countries. The BBC show has been running the longest and is on series 14.

So much has changed in this country since the first RTÉ series was aired in Spring 2009. In January of that year the State pumped its first €4bn into Anglo Irish Bank. Finance Minister Brian Lenihan introduced an emergency budget in April 2009, a month in which the first series was on air.

So having a show which appeared to be based on wealth, attainment of riches and financial success seemed remarkably out of step with the crisis of the period. Yet, the show was able to adapt, partially through the tone and approach of the Dragons, to the fact that many people were coming into the Den with a business idea, having just lost their job.

To some extent the show is a microcosm of Irish business and its changes reflect those of the fortunes of the economy. I have seen around 500 pitches filmed in the Den in the last eight years and it is worth analysing the 10 biggest changes which reflect wider shifts in entrepreneurship.

1. Fewer people come into the Den now having just lost their job. A very high ratio of Irish entrepreneurs start a business out of necessity. It isn't the best basis to begin, as the start-up can be under-capitalised and fail early. Today, a lot more pitches in 'Dragons' Den' reflect businesses that are well thought-through.

A recession might be a tough time to start a company, but many coming into the Den today, began in 2011 or 2012 and have come through it.

2. Almost everyone has a plan now. It might not always be foolproof but there is a degree of financial thought going into most of the businesses today that wasn't always there at the start. Few will get caught out on basic numbers and projections.

3. Enterprise Ireland has become very active in relation to early stage start-up companies. The State agency has always provided key supports but it is putting financial backing into a much higher number of early stage, and even high-risk startups. It will win some and lose some, but it was inevitable that to foster entrepreneurship, it has to back a lot of firms.

A much higher percentage of firms likely to come into 'Dragons' Den' for investment have already secured Enterprise Ireland backing than in the past and it is a welcome development.

4. There is a huge difference between being self-employed and being an entrepreneur. Quitting employment to start your own business might be an important part of developing as an entrepreneur. But more and more people are becoming self-employed without the intention of taking on staff or growing their business beyond something that suits their own life choices.

Increasingly, companies are using self-employed, skilled or semi-skilled labour as a cheaper option which allows them to avoid paying pension and other entitlements for full employees. In the UK there are now 4.7m self-employed people, many in what is called the "gig economy." In England and Wales, 15pc of those working are self-employed.

Most of these will not all translate into viable business that employee other people but many are a consequence of a casualization of labour markets.

In 'Dragons' Den', some people will develop an idea that is unlikely to go beyond a lifestyle business or providing a decent living for themselves. They won't be investable and are unlikely to expand. This has become more obvious to the Dragons.

Self-employment is often a vital stepping stone to building a business, but it isn't always going to move in that direction.

5. 'Dragons' Den' is seeing more and more women entrepreneurs coming into the Den. The growing number of women in Ireland setting up their own businesses is reflected in having three female Dragons on the panel this year. It is the first time in Ireland and the first time for the 'Dragons' Den' franchise anywhere in the world.

Female contestants tend to pitch better and probably have a higher investment success rate.

6. Younger people are setting up businesses and coming on the show. This season we had 18 people under the age of 30 pitching for investment. For some in their mid-20s they were still in secondary school when the show first aired on RTÉ.

The show is a factual entertainment programme formula but it is shown by some teachers as a tool for students to learn about aspects of business.

The fact that a growing number of twentysomethings are coming on the programme shows how more of them are considering entrepreneurship as a career option early on. This is really important if the country is to build a strong enterprise culture and reduce some of the economy's dependence on foreign direct investment.

7. There are more food, gaming and health ideas than pure website plays. A few years ago, the Den was full of pitches based on putting up something online and then selling advertising around it. These days pitches are playing to people's own core business strengths. The trend of setting up an ad-based website has been found out by the market and through bitter experience by many. It isn't easy. Instead, tech-based ideas are more specific and around things like gaming and a targeted market built around subscription models.

Food sector ideas still abound but the trend this year is in high protein and what is not in the ingredients (no sugar, no gluten etc).

8. In the dark days of the recession it seemed that nobody was investing. A core group of wealthy potential investors had lost their shirts in the crash. Now, there is a growing venture capital and angel investment community. We have even seen some pitchers pull out just days before filming because they landed their investment elsewhere.

9. More of the pitches are bankable, yet very few come into the Den with bank debt. It may be that banks are still very slow to lend, or it may be that startups are reluctant to take on debt. But sometimes even the most promising pitches with a track record in sales, don't have any loans.

10. Not enough people are thinking about Brexit. Lots of pitchers came in this year, with the old narrative of building up customers in Ireland then rolling out the product to the UK. Continental Europe, America or elsewhere are an afterthought. Only a handful had Brexit-proofed their ideas and had thought of going to other markets.

In so far as the show reflects what is going on in the startup business community, Ireland is in a much better place than it was eight years ago.

However, it is still a lot harder to build a successful business in Ireland than it is in the UK. Comparing the ideas in the BBC show, you can see that a reasonably good idea, with a well-executed plan can make a lot of money over there. We still have to fight harder to make businesses work here.

'Dragons' Den' begins on RTÉ One on Sunday night at 9.30pm.

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