Week 8: Pitches: The Bad and The Unluckiest Businessman alive?

Date: 15-Jul-2014 Post in: Business , Investor , Startups By: Raj Dhonota

In my last article I discussed some of the good pitches we have received to date and some of the common attributes that encouraged us to invest in them. Today I’m going to take a light-hearted look at the not so good proposals, including one by someone I think must be the most unlucky businessman alive – more to come on him later!

What’s a ‘bad’ proposal? In all honestly it is probably not ‘bad’ at all. It’s really only a subjective view based on my experience and knowledge about a business idea combined with the people behind the idea business idea and whether that combination fits the type of business I am looking to invest in. So for example, you may hear some great ideas but doubt the team’s ability to realise the potential; on the other hand you may have an idea which is not great but the people behind it have the right attributes to make it work.

What’s most important to point out is that, even though I may reject a business because in one way or another it was not right for me, it does not necessarily follow that the business will never succeed. I know this more than most, because during my early years I was rejected by a whole host of investors, but I still went on to be achieve what I wanted to.

By far the worst type of pitches are those where people come to me with an idea (feasible or not) but then add that they are not able to (or worst still, not willing to) invest any of their own money in their idea. Their contribution will be at some point in the future. So, for example, the pitch will go along the lines of “Raj, I have this great business idea! However, can you put up all the money I need to make my business idea work and I will market it once you have done so.” Whist there are many businesses where I do contribute the majority of the investment, being asked to assume 100% of the cost and risk almost borders on commercial suicide – and that’s not a proposition I find particularly attractive! Any investor, and I am no different, will want to know that the person has assumed a share of the risk in the business and is therefore just as motivated and geared towards making that business work.

Following on from this, I had an entrepreneur who could not understand why I was not willing to fund the development of his £250,000 idea without some contribution from him. For him, it was only people (not cash) and he therefore saw no risk for me at all. What he could not grasp was the loss of income from having some of my team working on his project for over a year.

Then there was another first for me. It was the opportunity to invest in a work visa for an individual! Not only that, but also the opportunity to pay for his family to come and live in the UK. I have no doubt that the proposal was based on a real need (which is always a great start for any business!) – but the need was not exactly based a ‘mass market need’ and neither was it the most scalable idea I’ve ever heard. So I decided to decline that opportunity!

Finally, there was someone who I think must be by far the unluckiest businessman alive – but still very much alive and kicking! His pitch began with several stories lasting about 40 minutes on how he had a very successful business, got robbed at home, how his management team left and decided to set up in competition with him taking his staff with them in the process. Shortly after that another colleague of his somehow managed to sell his business without his permission; to date he has not received any money from the sale. And if all that was not bad enough, he somehow managed to rip his trousers on the chair he was sitting on whilst telling us of his misfortune! Sometimes, as an investor, you have to take a hint, or in this case, the several hints, that this guy was a risk!

Share on Google+