For want of a nail the shoe was lost…..
3 Cardinal Sins that will turn your investors away.
I don’t know if many of you watched Dragon’s Den on Sunday evening (8 September) but my heart went out to the young inventor who so impressed the Dragons with himself, his product and his business, but still couldn’t get a Dragon on board. As a business woman, IP specialist and lawyer it was toe curling to watch. Let me explain.
First of all, the inventor had invented a truly brilliant all terrain wheel chair, which was driven by hand levers. The design was truly unique and inspiring. He had considered every detail including weight, construction, manoeuvrability and market. This amiable young man, had clearly done the spade work, and impressively much of it was done whilst in his final year at college. He had drive, enthusiasm, a great product, a profitable business and there was world wide interest in acquiring the wheel chair, including from Army rehabilitation units. His clever project really caught the Dragons’ eyes in terms of ethical investment. In their own way they all wanted to back him. So where did the poor bloke go so horribly wrong?
Cardinal Sin number 1.
The inventor had filed his OWN patents. Piers Linney the Cloud computing entrepreneur immediately identified that the inventor, having filed his own patents, had nothing of any real worth IP wise. OK, I know why he did this – cost. Getting a patent attorney to file a patent is expensive isn’t it? But filing your own is largely a complete waste of time. However, if he had actually spoken to a specialist, there could have been a number of solutions to this dilemma, including possibly filing a much less expensive registered design on the product, instead of multiple patents.
Cardinal Sin number 2.
Again this stumbling block was flushed out by Piers Linney. The product had no international IP cover. So although he had potential customers all willing to pay the thousands of pounds it cost for one of his wheel chairs, nothing he had invented could be protected – anywhere in the World. Again I can only assume that cost had driven this decision. Oh dear – if only he had known there are ways of delaying key costs, and also ways of tailoring the cost of IP to suit a modest budget.
Cardinal Sin number 3.
Peter Jones and Kelly Hoppen then went onto inquire about shareholders and who was in the business etc. It soon became clear that the company had a number of “interested parties” in it which consisted of various people along the way who had helped the inventor. The ownership of shares appeared to be random, with various “interested parties” from the past with no clear role.
As the third skeleton rattled out of the closet you could see the Dragon’s eyes glaze over in disbelief. You see it is a racing certainty that all the Dragon’s have had serious IP and legal issues in the past and have crashed and burned as a result of their carelessness. Indeed in a survey by Entrepreneur Magazine the number one business mistake serial that entrepreneurs admitted making in their early days of business was to over look their IP when they started out.
I know Dragon’s Den is great TV. The people who appear may often be chosen simply because they make good TV, not because they’re a good bet. But this business really did have it all – apart from great IP. Fear stops us from asking the question, what investment must I make early on in order to make this business worthwhile. For want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the man was lost. Forewarned is forearmed.