YogaBugs - stretching credibility
I watched the Dragon's Den on TV tonight. I was intrigued by the yoga product for kids called YogaBugs. The idea was good; the numbers were sound; the Dragons lined up to make offers to the slick, media friendly women behind the idea.
In the end the offers were turned down. The investors wanted 30% of the equity when 15% had been offered. 295,000.00 Euro was on the table. That is 570,051 NZ dollars.
When the women left I couldn't help but feel they never really wanted the money.
The business was in good shape, cash flow was positive, there was market interest in the product and the timing was right. The women were very well schooled on presentation techniques. Their 15 minutes of fame were crucial (in my opinion) to getting what they wanted - and it wasn't investment from the panel of Dragons.
I guess the show rates quite well in the UK. It has come back for another season and is licensed around the world - we've seen the Australian and New Zealand versions. If you click on the newspaper article you should be able to read the copy - at the end of the story is the comment that the women couldn't believe their 2 and a half hour presentation was condensed down to 12 minutes of airtime...Um...hello...? The media value of that time must have been hundreds of thousands of Euro if it had been bought on the spot market for ads. Turning the Dragons down created a secondary media interest and offered them a good psychological position from which to negotiate in private with other investors. Because the brand was quite well established the risk of leaking the concept into the public domain (yoga for kids is not protectable) it was a winning strategy that I can't believe wasn't preplanned. Let's not kid ourselves otherwise.
As a footnote I don't think there has been 12 minutes of airtime devoted to the humanitarian Crisis (read genocide) in Darfur on all of New Zealand's free to air broadcast TV channels put together in the past month.