How to get funding from the Dragons for your website (because they don’t understand the Internet - as proven by DiamondGeezer.com)
I’ve just watched Dragon’s Den, Series 6, episode 2 and my jaw dropped. Why? More on that later, but for now here is how to easily impress the Dragon’s and gain some serious funding.
1. Tell them the turnover (not profit) of the biggest website that currently occupies the same niche as yourself. Obviously the bigger the better.
2.“Impress” them with some slightly average search engine results for a couple of key search terms. Judging by this weeks’ episode, position 9 and position 12 will get you over a quarter of million pounds investment.
That’s it!
On last night’s episode a website did exactly this. The site concerned is DiamondGeezer.com who last year had a turnover of £1.6 million but a profit of only £3,243.
However because the guy who was pitching said that the biggest site in this sector (BlueNile.com) had an annual turnover of $330 million - and that DiamondGeezer.com held position 12 on Google for “diamond” and position 9 for “diamond engagement ring” they actually made him an offer.
To top it all the offer was the highest ever in Dragon’s Den, it was £255,000 for 40% of the business. In fact so keen were the Dragons to invest that 3 of them (Theo, Peter and James) all wanted to be part of the investment. However the owner of the company - can you believe this - actually turned them down!! Apparently he thought that £255k for a 40% investment of his company, which made £3,243 profit last year remember, was actually too high!
I honestly can’t decide who made the worst decisions in tonight’s episode. Was it the Dragon’s for wanting to invest such a large amount of cash into such a small business, with slightly-above-average search engine rankings? Or was it the owner of the business who turned them down?
We all know that last year Theo made a similar mistake and blew £200k on another online business, but you would think he would have learned by now wouldn’t you? Obviously not.
Now I know a lot of affiliates who have much better rankings (positions 1 to 5 for example) for sites in much bigger sectors than online jewellery. The majority of which would probably call it a day if they didn’t make £3,243 profit in a week or less, never mind a year. So it makes you think what kind of funding we could all secure if we ever entered the Den with a real web business that was making good money, in a profitable sector and had good search engine results? Anyone up for it?
If you haven’t seen the pitch then please click here to watch it. And just watch how the guy manages to get James, Theo and Peter to part with their money by telling them about a few average serps results. Amazing.
What I’m listening to right now: Joe – “God’s Work”
Wednesday, July 30th, 2008 at 11:29 pm and is filed under General Ramblings, Making Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Welcome to my blog. My name is Kieron Donoghue and I run UK Offer Media Ltd. I thought it would be fun to post a daily (well hopefully daily) blog, writing about my experiences in Internet Marketing and more specifically Affiliate Marketing. I'll include some personal stuff too, probably about my other passions, music and cars. Please feel free to post your comments and thoughts too.
July 31st, 2008 at 12:14 am
I know what you mean mate.
To be fair to the owner though they weren’t really being as generous as it seems, he had to throw in his freehold property and write off a £100,000 personal investment he had made into the business so in reality they were getting him to throw a fair bit into the ring and give them 40% of the business - under those terms I think most of us would have turned them down.
Totally agree with your comments re how they reacted to mediocre serps results though.. maybe we should have a go….;-)
July 31st, 2008 at 9:59 am
I wrote about this on my wedding blog yesterday
http://www.weddingo.co.uk/2008/07/30/would-you-buy-your-wedding-ring-from-diamond-geezer/ because of the “Diamond Engagement Ring” Google keyword reference. The funny thing is (whilst not doubting that it was at no. 9 at the time of filming) it does’nt even appear after the first 13 pages today (I gave up after this !)
July 31st, 2008 at 12:47 pm
Hi Keiron
I’m just writing some copy for Angelsden.co.uk about the nature of angels and my feeling is that when they sit down and look at the business it won’t proceed.
One of the “facts” is “Business Angels don’t expect that every angel investment will earn significant returns. They are aware that around 40% will result in a partial or complete loss.”
It’s likely that this potential investment could fall into this category. But the angels on Angels Den aren’t mugs, they’ve got the cash in the bank for a reason.
July 31st, 2008 at 12:59 pm
I too was suprised by the dragons reactions to the SERPs.
£1.6m turnover and only just over £3k profit - he must have been taking a big wage!
July 31st, 2008 at 1:27 pm
From the Dragon’s point of view there was minimal risk in the offer they made - the guy was putting in a £300k office + £250k in stock. £255k for 40% of that isn’t a bad deal. If the website does do well they own 40%, if it doesn’t do well they’ve got some real assets backing their investment. Heads they win, tails they don’t lose.
That’s the difference between this offer and what we do - none of our businesses have assets so an investment would purely be hope value, obviously much riskier than this.
July 31st, 2008 at 2:56 pm
hmm he shud of took the deal, but sometimes they dont know what they are talking about.
July 31st, 2008 at 2:58 pm
Well said Kieron.
Well, I’ve just got back from a meeting where I was showing an agency we were in position 4 in Google for a popular jewellery term, and I know other affiliates do far better than us with SEO, so perhaps more SEO affiliates should go onto Dragon’s Dean.
I find the whole notion of “turnover” bizarre. I get at least one person a week trying to dupe me with what their turnover is. Pure profit, after ALL expenses, is what it’s all about, not your turnover, nor how fancy your offices are, nor how many staff you have.
Based on pure profit, affiliates are amongst the most profitable businesses in online marketing and their revenue per head far outstrips others.
July 31st, 2008 at 4:50 pm
I didn’t see it, but I’m curious what he proposed to use £255,000 for? It would buy a hell of a lot of SEO!
August 1st, 2008 at 11:22 pm
Sounds like the site needs some PPC.
August 3rd, 2008 at 8:48 am
Even I make then that in profit per year so something must be going wrong with his site!
August 3rd, 2008 at 10:49 pm
It was just shocking to say the least, not exactly a high class name for a site either, would anyone outside of London actually buy! Whilst I think the dragon’s are a little naive to domains and serps etc, I think the conversation over the freehold building was more what they were interested in, that would have resulted in an investiment for no risk.
I had the same thoughts when the dragon’s went mad with interest over thenutspokerleague.com, saying it was a great domain name…ermmm, don’t think so!
August 4th, 2008 at 3:22 pm
I was shocked at how he was doing, how can he have only made over £3k profit - it didn’t make sence. His figures were all wrong and usually the dragons are quick on that kind of thing. Like you say jewelry affiliates should be earning loads more than that - I do think sometimes though people go on dragons den as part of a marketing ploy - that girl that went on last year that hired out cars I think it was and was sat on a big vehicle for her campaign did quite well from appearing on the show.
August 5th, 2008 at 8:18 am
LingsCars? Yep, one of the biggest now, with a very wacky advertising campaign!!!
August 5th, 2008 at 2:49 pm
‘The majority of which would probably call it a day if they didn’t make £3,243 profit in a week or less, never mind a year. So it makes you think what kind of funding we could all secure if we ever entered the Den with a real web business that was making good money’
You’re missing the point - if affiliates make that much money, they don’t need investment…