UNIVERSITY OF THE WESTERN CAPE
FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES
SCHOOL OF BUSINESS AND FINANCE
Research & Communication for Business
RCB711
Case Study: Dragons Den
Discuss the extent to which the entrepreneur has been able to connect to the audience?
What communication techniques did she apply and how effectively has she used these
techniques?
by
Riaan Niekerk
275052
Lecturer: Prof. R. Shambare
CASE STUDY:
Business Owner: Charlotte
Business Name: Little Loop
Business Pitch: 70 000 Pounds for 7% Equity
Industry: Retail
Video: https://www.youtube.com/watch?v=S6bXlHeZWs4
Author: Riaan Niekerk
Due Date: 07 March 2022
TABLE OF CONTENTS
1. Introduction
Pg. 1
2. Background
Pg. 1
3. Effective Communication
Pg. 2
4. The Investment Pitch
Pg. 2
5. Non-verbal Communication
5.1 Dress Code
5.2 Body Language
5.3 Eye Contact
5.4 Facial Expressions
5.5 Gestures
5.6 Visual Display
Pg. 2
Pg. 3
Pg. 3
Pg. 3
Pg. 3
Pg. 3
Pg. 3
6. Verbal Communication
Pg. 4
7. Negotiations
Pg. 5
8. Summary
Pg. 6
9. Lessons Learnt
Pg. 7
10. Recommendations
Pg. 8
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1. INTRODUCTION:
As part of our RCB711 modules we were requested to complete a case study on a video
analysis of a business owner pitch on one of the episodes of the popular UK reality show
Dragons Den. We are required to observe the video and discuss the effectiveness of her
communication, which techniques she used and how she was able to connect with her
audience.
In this case study I will break down her communication skills, including her verbal and none
verbal communication and provide an analysis of her overall business pitch.
There are different methodologies for research and in this case study it is observational
research. Observational research is non-experimental research where behaviour is observed
and recorded.
2. BACKGROUND:
Dragons Den is a popular reality show where business owners appear in front of multimillionaire investors, who are called Dragons, to pitch a business idea or opportunity with the
hope of securing investment to start or scale a current business. It is now in its 19th Season of
airing on the BBC network in the UK.
The rules of Dragons den are that the business owners have approximately 5 – 10 Minutes to
pitch their business opportunity and explain what the investment opportunity is with the hope
of securing an investment. The “Dragons” then have an opportunity to question the
entrepreneur on their business before considering an investment. The entrepreneur must
secure what they asked for and not anything less, which in this case is 70 000 pounds for 7%
equity of the business. Entrepreneurs are allowed to negotiate any offers made by the
Dragons.
On the series there has been pitches that were extremely good and some that have bordered
on the ridiculous. Candidates have displayed a few common traits that were successful which
I will discuss in more detail.
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3. EFFECTIVE COMMUNICATION
There are a few key characteristics or attributes of effective verbal and non-verbal
communication which are not applicable in all circumstances. In communication there is
always a sender and a receiver of the communication which can take many forms - a manager
taking to his team, two friends talking, someone going for an interview to name a few. In this
case study it is a business pitch which is a form of negotiation.
4. THE INVESTMENT PITCH
It is necessary for entrepreneurs taking part in the show to be able to communicate well and
effectively. Poor communication is one of the main reasons why some pitches fail, e.g. not
communicating a clear understanding of the business in its internal and external environment,
which includes its business model, its competitors, marketing strategy, to mention but a few.
A business pitch is similar to an interview and can be very daunting for any entrepreneur as
the have a once in a life time opportunity for an investment from a multi-millionaire investor
that could change their lives and business over night. One of the challenges for the
entrepreneur is that this form of communication is external to the normal business
communication. Which for the entrepreneur might be “foreign” or not be in their comfort zone.
There are a number of contestants who fail to adequately prepare for their chance
In the pitch there are various sources and forms of communication that we can learn lessons
from regarding the communication process of the verbal and nonverbal messages the sender
and receiver are receiving.
The entrepreneur is pitching a clothing business where you can purchase clothing and at any
given time swop it for other clothes and provides reasons why this business works in more
detail.
5. NON-VERBAL COMMUNICATION
Body language is important in pitch, (work together) as it helps to make investors feel relaxed
and at ease. E.g. using hands naturally, standing up straight and not forgetting to smile.
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5.1 Dress Code
The Entrepreneur is very dressed down and casually dressed which is surprising as most
would assume that you would be wearing a suit when pitching in front of investors. Her choice
of dress has two objectives in my opinion, something that she feels comfortable and to create
a relaxed atmosphere.
5.2 Body language
The stance of the entrepreneur is relaxed and she displays no distracting movements, like
fidgeting with her hair, etc. She used her hands to direct focus on her display and to emphasize
various points. Otherwise she had them hanging loosely together in a very relaxed manner.
5.3 Eye Contact
Eye contact is very important in any form of communication and the entrepreneur makes good
eye contact from the word go by taking her time to look at and engage all the dragons.
It is easy to get lost and only focus on one or two people and this might be dangerous in an
investment pitch as some of the investors might feel isolated and feel that you might not be
interested in them in particular as an investor.
5.4 Facial Expressions
From the time she walks in she portrays very confident and engaging facial expressions, which
includes nodding to acknowledge that she is listening to the panel when they are asking
questions or giving feedback.
A simple nod can be very effective affirmation that you are actively listening to a speaker.
5.5 Gestures
All her gestures are natural and calm and she displays very confidant body movement as well
as hand movement.
5.6 Visual Display
With any business pitch it is very important for the entrepreneur to tell a story and explain the
business as an investor will not invest if they don’t understand the business. In any type of
communication or presentation the use of visuals is very important to help paint a picture.
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Her display was very effective in creating a picture of the problem and the solution her
business provides. If you look at the start of the video the dragons were already discussing
the display before she entered the room.
She also had samples available that she shared with the dragons so that they could see some
of the clothing products to get a better idea of the product.
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VERBAL COMMUNICATION
Your verbal communication is very important and ties up with your non-verbal communication.
Many investors want to know and understand your business and it is important to be able to
use the right words, portray a picture and a story that the investors can relate to.
The entrepreneur does a very good job with her verbal communication to the investors
throughout the pitch and I will demonstrate with a few examples in the pitch.
As the entrepreneur enters the den she looks very confident and greets them with a smile and
a positive tone which will set the stage for the pitch. Sometimes something as simple as a
greeting can be an effective first impression.
She starts off by introducing herself and giving a brief background of herself which is always
a good idea so that investors know who you are and where you come from. She does not have
past experience in the particular industry she hopes to start up, but this can be negated by
having a thorough understanding of the business and the industry. She also tells a small joke
that gets everyone laughing which adds to the relaxed tone of the pitch.
In a business pitch an investor needs to understand what your business is about and how you
have identified a problem, a solution for that problem and how you can make money off it. She
starts off by telling a story of her own experience with her children and intentionally gives their
names which makes the problems of frequently purchasing new clothes for them, more
relatable as she is doing this she moves towards the display to emphasize the problem and
what the solution could be. This is called a background problem statement for a business and
what its unique selling points are.
She told a relatable story as one of the Dragons Sara Davies says “I know exactly what you’re
talking about as I have kids and face the same problem”. This means she has definitely hit
home with the concept as the dragons could relate to their own experience. Which is also
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evident when Dragon, Deborah Medan’s first words are “you have very clearly described the
issues”
She also acknowledges any advice or compliments with a thank you and big smile.
When she is asked questions, she is able to respond immediately and not second guess
herself, which also shows she is confident and knows the industry. This is important for any
speaker to know their subject matter as questions or a rebuttal might be done.
Peter Jones questioned her about working with big brands and she could indicate which
brands she would be willing to work with as she was only willing to work with brands that had
sustainability at its core and this is very appealing to a lot of investors as most want to invest
into business that have green credentials. Dragon Deborah Meden is renowned for investing
in business that have sustainability as part of the business model.
After the picture and setting is done for the investors the financials and business model are
the next biggest concern. When questioned she clearly indicates a knowledge of the industry
by giving details of a similar company in the U.S that is successful and what her business
model will look like for the next three years with projected cashflow figures.
Steven Bartlett understands the business and can see it being successful in the future which
is another indicator that she communicated the business proposal well and also where they
want to be in the future.
4 of the 5 dragons make an investment offer, which by her body language we can tell she is
over the moon. It is not often to get investment from investors but speaks highly of how well
she communicated verbally and non-verbally her business idea and what the scope of the
investment opportunity is. She was able to secure a 25% investment for 140 000 pounds from
2 investors, Deborah and Steven after she proposed that the 2 join together for an investment.
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NEGOTIATIONS
In any business partnership or relationship, negotiation is a very important part of how the
ownership and or investment is structured in a way to benefit both partners. Negotiation is
considered an art, and some people are very good at it and some are not so good.
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The one area that I would criticise the entrepreneur is in her negotiation skills. The pitch always
starts with the balance of power in the investors hands as the entrepreneur wants investment
from them. If the investor is happy, they will consider an investment, but this is not easy to
attain and many entrepreneurs leave the den without securing an investment.
In this case study the entrepreneur actually succeeds in getting four of the five potential
investors to make an offer, which is rare in the den and a sign that you have a good business
with growth potential as all investors want a return on their initial investment.
The balance of power has now shifted to the entrepreneur who was more excited about having
all these investors interested but looked pass the point that she could have played them
against each other to secure a better deal for herself. In most instances like this the
entrepreneur makes a counter offer. In her case her equity amount ranged from 12.5 to 15%
for the 70, 000 Pounds investment she requested. In my opinion, she was in a position to
counter for a lesser percentage, perhaps closer to 10% as one of the investors could possibly
have accepted that deal to secure the investment from the other dragons.
She then made an interesting proposal for two dragons to join together where she could also
have proposed a lower percentage as the risk factor to the investors would be halved and
make it a less risky investment.
The art of negotiation is a difficult skill but useful and crucial in some instances as the
entrepreneur has yet to see the effect of giving a bigger percentage of ownership of her
business away.
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SUMMARY
I would conclude that this was a successful pitch and there are many lessons we can learn
from it. The effectiveness of strong verbal and non-verbal communication cannot be under
estimated. The entrepreneur *played to her strengths and made sure to keep her audience
engaged whether it was through nonverbal gestures like body language, body movements,
visuals or simply eye contact.
The most important goal when communicating is clarity. In order to communicate clearly, I
believe in the KISS principle (Keep it short and sweet) When things are simple they eliminate
clutter, move faster and reflect greater clarity.
Speak in a way that is clearly understood, without confusion, ambiguity or misinterpretation.
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In conclusion, we should remember that communication is a product that needs to be
assessed and refined on a continuous basis.
Speak slowly and clearly and make sure you bring across your message with storytelling, facts
etc. for your audience to relate to this story and to keep them intrigued.
People want leaders to believe in. You have to let them believe in you by using your words,
gestures and vocal delivery to give a strong message and drive it home.
The effectiveness of the message in your speech is determined by the audience and not how
you wrote the speech or delivered the message.
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LESSONS LEARNT: INVESTMENT PITCH
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Have a unique value proposition/USP as you will have competitors and you need to
differentiate from them.
Show potential investors where you are in your journey and that you have a vision to
scale the business to even more customers and communicate this effectively.
Tell a story of your business to impress and excite people about your business
Ask for realistic amounts as you do not want investors to lose interest before you even
start.
Have a catchy Tag line to grab interest of your audience “I would put Apple out of
Business”
Describe the problem your business solves and tell a story to evoke emotions (Feel
what you are feeling). Demonstrate the solution/ Illustrate why you are best in your
target market/ Convince your solution is the best in the market
Know your figures (Knowledgeable) – Relevant stats and figures to substantiate
problem (For dramatic effect) Explain your business model (how you make, money)
and that you have a solid plan to generate money & create revenue.
TRACTION – Explain what you have achieved so far & how you plan to grow your
business.
How your concept works and how you have tested it – Proof this visual what your
product or service works (Visual – Picture/Video) Application features.
10 RECOMMENDATIONS
It is a very useful part of a business pitch to know how to negotiate and the do’s and don’ts of
negotiating. You would need to maximise the injected investment for the business at the lowest
equity rate. In this case study we can clearly see that the entrepreneur could have perhaps
secured a lower equity percentage as with a lot of business as they scale they might have to
dilute more shares further down the line to raise more money to scale the business further in
the future. Her current ownership of 75% will be diluted further.
She did well in her pitch but one aspect she missed which could have been crucial in the
investors understanding the business opportunity. Customer feedback is very important, she
did not mention anything about customer feedback for example that she is getting positive
feedback from clients who is loving the service and this helps validate the business A lot of
businesses are reliant on customer feedback and it also gives a better idea of the market and
the market opportunity. I would recommend always including this in a business pitch.
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