Wednesday, 8 July 2015

Why Crowdcube and ECF is not like being in the Dragon's Den

Crowdcube based their original marketing on the idea that anyone could be Peter Jones or Kelly Hoppen off Dragon's Den. They still use the idea on the site - have a go, be your own dragon.

It is of course complete nonsense. The TV show is mildly interesting and has made a lot of money for Jones et al. What it has that equity crowdfunding is missing, is the key ingredient - the help of a real Dragon with very very deep pockets and very very important friends. Joe Blogg's dragon puts £200 into the Great British Sauce Co and has neither. He is also expected to take a back seat - no right at the back please and allow the business owners to run things. With real Dragons, they have a much greater say, are listened to for obvious reasons and use their experience, skill, money and contacts to improve their own investment.

When the money is tight - as in nearly all early stage businesses it will be at some stage - real Dragons can loan the company money or bring in new investors. Joe dragon just has to sit  and see either his investment fold or be asked to pay in more with the threat that if he doesnt his original stake will be diluted.

Really the two are as about as similar as the Moon and Uranus - they are both planets out there but that is where it ends.

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