See Sharon on the Dragon's Den site.

In the five year history of Dragons' Den, it is hard to remember a more perfect pitch than that of Sharon Wright. Would-be entrepreneurs should take note of it as a textbook example of how it should be done. But you may have missed the most extraordinary sign of her success.

She not only got more money than she had asked for, she also managed to secure her investment on better terms than she had originally asked for. In other words, she sold shares in her company at a higher price than she had originally been demanding. I don't think that has ever happened before. This case is one of a few where the entrepreneur effectively offered shares to the Dragons at a discount to the real value.
This is the calculation. She came in looking for £50,000 for 15% of the business. That means she was effectively offering each one per cent of her company to the Dragons for £3,333 (50,000 divided by 15). James and Duncan offered her £80,000 for 25% shaving a small amount off her price for each percentage share, taking it down to £3,200. But she ultimately got them to accept £80,000 for 22.5% of the business, making the final price of each share £3,555. She got £222 more for each share than she had been asking when she came in. A true dragon slayer. Now of course, the Dragons are not silly. So an important question is why would they pay more share than they need to?
Well, this case is one of a few that we see where the entrepreneur effectively offered shares to the Dragons at a discount to the real value. She enticed them to buy into her company by making her shares a bargain.

Why?

Because she desperately wanted help with the business, and wanted a Dragon or two on side in particular. It was worth offering a good price to get a deal. Whether it was accidental or deliberate I don't know, but it worked. And such was the bargain on offer, it meant the Dragons wanted as much of it as they could get. For them, the more shares the better.. even if they got more shares at a slightly less bargain price.
So the deal that was eventually done helped both sides: she got her two favourite Dragons at a marginally better rate than she was originally offering; James and Duncan got a more sizeable share of the company at a price that was still very advantageous.
A good way of looking at what went on here is that it was one of those occasions where the entrepreneur pays for an investor to come on board. It has happened in the Den before and it also happens quite often in the real world. On occasion some good investors get offers of shares for free. They don't have to contribute any cash, just their expertise and credibility. And in fact, it happened last year in the world of high finance. The world's second richest man and most successful investor, the American Warren Buffett was offered an investment in the world's most successful investment bank Goldman Sachs at a preferential rate. Goldman Sachs needed the money, but like all investment banks they also wanted credibility at the time, and that was something a Warren Buffett could bring. They felt it was worth them paying for it.
Sharon of course, does not have Warren Buffett on side of course, but she does have James and Duncan.

Let's hope she makes them work for the shares they've now got.
Eamon's Checklist

* 1. She didn't ask for too much money. £50,000 is very much more attractive to a Dragon than £200,000.
* 2. She didn't overvalue her business, for reasons I've explained above.
* 3. She exuded charm and humility rather than arrogance, making her an attractive person to work with.
* 4. She had a simple but persuasive product demonstration.
* 5. She had a clear reason for being there, and a convincing answer to the question "why do you need the money?"
* 6. She had a solid grasp of her numbers (and the numbers themselves were fortunately solid).
* 7. She had accumulated clear evidence that there was a demand for her product.
* 8. She was honest in answering questions. At no point did it sound like she was stalling or hiding anything (even when she was asked which Dragons she most wanted to invest her).
* 9. She kept her cool when events in the den were out of her control (notably when the Dragons hit an odd standoff, each refusing to make the first offer.)
* 10. She negotiated to the end.. and didn't accept Duncan and James's first offer as their last.

Now of course, it is easier to put on an impressive performance in the Den when the fundamentals of your business are as good as Sharon's. But many entrepreneurs with a good proposition let themselves down with a bad pitch. They should watch Sharon's pitch at the top of this page - it should be an inspiration!
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