I love watching programmes by the BBC in the UK. I used to order indian take out and eat in front of my favourite tv show/documentary. My favourites were, "A picture of Britain", "Top Gear", and "Dragons Den".
Dragon's Den is a fantastic show for gaining a little bit of insight into how venture capital works, and what is involved.
The format of the show goes like this. There are five "dragons", well seasoned businessmen, who are successful in their own fields and are acting as venture capitals. An interested entrepeneur/startup auditions to be on the show, and is given something like 5 minutes to pitch their ideas to the dragons. They have to propose a certain amount of investment, say 200k for 15 percent. The startup must get at least 200k of investment otherwise they leave with nothing.
I was recently you-tubing dragon den episodes and chanced on a US version of the show, and a seat grabbing episode at that.
Jobloft.com is an interesting canadian company with a unique value proposition. They are niche targeted at the high turnover industries of service and hospitality, and have several web 2.0 functions that help in easing the process.
Two of the founders managed to secure 200K worth of investments for 50 percent of the company, only to have the cheque torn up subsequently and the deal negated. What happened? Watch and see for yourself!
The question is what would you do? If you were the jobloft founders?
As the co-founder of Nuffnang.com, I can speak for myself, and what I think I would do.
Doctor Norris, academic "mentor" (haha, like MM!), scorned the 200K the dragons were contributing saying it was very little money. One of the VC's shot back saying this, "Its alot of money if you don't have any." That is unfortunately the entire truth. VC's at the end of the day get bang for their buck (in return of course partly for the risk they take), because their money is valuable to startups that have none.
If you asked a guy with a million bucks what a million bucks is worth, he'll probably say, another million bucks. Ask a beggar with nothing, what a million bucks is worth, and he'll say EVERYTHING!
I would personally consider, what the money is worth to me. Do I have it? What can I do with it? How far will it take me? Are there other factors to consider? Contacts? Networks?
But, I would also consider whether the VCs are on the same page as me. Do they have the same vision? Do they believe in my strategies, or do I believe in theirs?
I think Timothy would say the same. I am fortunate to have a partner that complements me well, and shares the same vision for Nuffnang.com. If however, we introduced new parties into this relationship, would they be as complementary?
I like the principles of the founder of the company. "We have tremendous respect for him, and if not for him, we would not even have had the opportunity to pitch to you. He's believed in us from the beginning."
The VCs could not believe they were turned down. Their money was worth more. Their egos has been insulted by this mentor, and yet, their money had been turned down. "If I were one of those guys, I would have stopped him (from tearing the cheque), and said we can fix this. But they didn't do that, and that says a thousand words about them.", said one of the dragons.
It speaks just two words to me. Courage, and principles. I'm certainly no great authority on success myself, but I believe these are two things every entrepeneur should have. Courage and principle. If they had the courage to turn their back on the 200k and stick up for their mentor, I'm sure they will go far, be it with jobloft.com, or another venture in the future.
Check out their blog entry here, for more juicy insight.
Heavy material indeed! For a lighter side of things check out this spoof of the UK version of dragons den! I miss the BBC! Thank god for youtube!
