A great idea on its own is not enough

Eureka kicks off its new 'Funding Design Innovation' section with an exclusive interview with Evan Davis, presenter of BBC2's popular Dragons' Den series You or your company may have a great product or new technology, and you may have done the necessary market research for the product. If you're really lucky, you might even boast a handful of customers already. But to have what it takes to convince investors to part with their cash is another problem altogether. And it was this very issue of funding innovation which formed the basis of BBC2's recent 'Dragons' Den' series, which involved private inventors presenting their idea to a panel of five, hard-nosed, self-made business entrepreneurs in the hope of attracting the necessary funds to take the product to market. The basic format of the series was straightforward. Five panellists listened to a presentation from an individual and then had to decide whether that product, technology or business idea was worth investing in. Each individual or inventor on the show had to pitch for a maximum of £150,000, with most either failing completely or attracting a smaller amount from one or more of the judges. While the show was essentially an entertainment programme - hence most of the amusing confrontations between judges and inventors were edited in - the show also had a very serious element and attempted to educate viewers in the art of seeking funds for business ideas and inventions. Evan Davis, presenter of the show and Economics Editor at the BBC, explained further: "The show included incisive, intuitive business comments from the panel and was not simply about entertainment. The judges had to sometimes probe very deeply in order to verify whether the product would really work in the marketplace." According to Davis, there are many lessons to be taken from the series. One of the most important, he explained, was to understand that investors often look very closely at the person behind the innovation, they are not simply investing in the product itself. He said there are basically three factors that determine whether a business idea or new product is investment-ready: is the problem solved in a unique or innovative way; is the size of the market known; and are the skills, experience and ability of the individual likely to "make things happen". He described the four different scenarios on the series: "First, you get the individual who pitches an idea very well, but the personality renders the investment unattractive and the perceived value of the product is zero. This always resulted in zero investment from the panel. "Next, you had the products which clearly had value, but the person or team of individuals were not considered by the judges to be the ones to take it to market, hence this resulted in no funding being offered." The third scenario, he added, included those individuals who had very good products which the judges could see potential returns from, but where the negotiations then broke down because agreement could not be reached as to the percentage of shares in the business the investor(s) should receive as a result of the investment. This, Davis described, was the "dignified way that individuals could walk away from the show". The fourth scenario encountered on the show, involved individuals whose ideas were sound and which had value from an investor's point of view, but the way the idea was presented to the panel meant that the judges had to really probe deeply to discover the excellent product. As Davis commented: "As an investor, a poor pitch is an obstacle you have to try to cut through to get to a good idea. Admittedly, a slick pitch can be off-putting and sometimes even disguise a poor product very well, but again, a good investor should see through this." Davis also suggested that inventors try out practice runs if they think their product is a winner. "Business plan competitions or technology transfer offices are a good start," he said. The key is focussing on explain9ing to others what makes your solution more innovative than anybody else's. Being open to criticism also helps. As a television show, Dragons' Den started out in Japan as a late night TV show. Davis explained that Sony owned the format of the show but that the BBC hired the idea and adapted it for the UK market. Apparently, in Japan, each show was more than an hour long and looked at ideas or new products in much more technical depth than the UK version. While Davis did not promise a future Dragons' Den series focused on engineering design that Eureka hoped for, he did hint that due to the popularity of the first series, a second series of Dragons' Den now looks "inevitable".