Posted 5 years ago
It's all about the pitch
Pitching is an integral part of corporate fundraising. We often have to stand up in front of groups of decision makers, some of whom we have never met before, and convince them to invest tens, hundreds or possibly millions of pounds in the organisation we are representing.
The results I have achieved in my career so far tell me that I am good at pitching but I am always keen to learn more and improve as much as I can. The challenge is, most pitches happen behind closed doors; we don't get to see what those we are competing against are saying, or how they're presenting their offering. I cannot easily compare my pitching ability with others as the only other pitches I've seen have been by colleagues or mock pitches at conferences. This is why I love Dragons' Den; it allows me to see how others pitch; I can see what works and what doesn't and learn from the experience.
The entrepreneurs are not pitching for a donation; they are asking for longer-term, mutually beneficial partnerships. They are seeking a financial commitment from "the dragons" in exchange for the future return that they hope to deliver. This is what I ask companies to commit to in my charity pitches and this is what I have learnt from Dragons' Den so far...
Have confidence in your valuation
The most common mistake that I have seen pitching entrepreneurs make is not understanding the basis of their valuation. They cannot explain to the Dragons why their business is worth the millions of pounds that they have suggested. This makes it very difficult for them to justify the amount that they are asking for in exchange for the equity share that they are offering in their business.
“That’s going down as the most ridiculous valuation ever in the den.” - Peter Jones, Series 13, Episode 1
This is an easy trap for corporate fundraisers to fall into as well. I remember one of my colleagues pitching a £250,000 commercial contract to a cereal brand a few years ago. When I asked her why she had chosen that amount she told me that her manager had set their team the target of getting a certain number of contracts worth £250,000 or more in that year. That was the sole basis for her choosing that figure. It wasn't based on market research, the brand equity that would be gained by the company or the financial return that they should expect. It wasn't backed up by any analysis or evidence to suggest that this level of investment would make commercial sense. Unsurprisingly, the cereal brand didn't go for it. They did come back with a lower, counter offer but my colleague was told not to accept it as this would devalue the charity's brand. Again, this was a decision based on the manager's financial targets and beliefs rather than any factual evidence. Sadly a good opportunity was missed as a result of the manager's lack of commercial awareness.
As fundraisers, if we are entering the commercial market then we need to understand the commercial basis of the conversations we are having. We need to know why we are asking for a certain amount and the flexibility we have to negotiate with potential partners.
Tell them what you can do for them, not what they can do for you
Sometimes the commercial advantage of partnering with a charity is not as obvious to companies as it is to us as fundraisers. We know that people are more likely to buy a product if their purchase includes a charity donation, employees will be better motivated if they're involved in fundraising or volunteering and a strategic partnership can act as a real brand differentiator. It is our role to explain this to our prospects in language that they understand.
"You've just explained why we add half a million pounds worth of value. I'm not sure that you've explained why you add half a million pounds worth of value." - Deborah Meaden, Series 14, Episode 3
In a recent Dragons' Den episode, French entrepreneur, Sylvain Preumont, asked for an £80,000 investment for a 15% stake in his company - a personalised 3D statue and candle company. Through the dragon's questioning, it appears that Preumont's business is completely replicable without his involvement; he gives them no reason why his involvement in the business provides any added value.
"I can do all this myself so I don't need you then." - Peter Jones, Series 14, Episode 3
Often, companies will assume that the value that a charity can add would be to contact its entire database and promote the company's product to its supporters. If this is something that your charity can offer then that's fantastic; you can easily set up an affiliate deal with a company. Unfortunately, many charities do not want to market a third party’s products to their supporters, often because they know that this will not achieve the desired result for either party. This means that the benefit being offered to a prospect partner may not feel as tangible to them as an affiliate partnership might. Instead the value that you are offering them is the opportunity to talk about something different, demonstrate that they care about issues that affect their customers and form positive associations with their brand. This can be something of great value to a company so make sure you are aware of that and are ready to justify why you have priced it the way you have.
Know your market and your competitors
Although we are all surrounded by charity advertising this does not mean that those who do not work in the sector absorb any of it. This year's CAF survey found that only 67% of the UK population have donated in the last 12 months and only 42% have given in the last month. The average Joe Bloggs does not know which the number one charity brand is or the levels of brand awareness, trust or love that your charity achieves. They do not know that two thirds of the population give to charity and they do not know that people are more likely to recommend a brand that supports a good cause over one that doesn’t. It is therefore our job to give context to the pitch before diving into the partnership that we are offering.
The best entrepreneurs do not enter "the den" assuming that the dragons understand their market or know who their competitors are.
"You can’t come in here and say you don’t know how your business works.” - Deborah Meaden ,Series 13, Episode 1
Dragons' Den has also shown that competitors aren't always a threat - in Series 5, Episode 5 the founders of HungryHouse.co.uk pitched their business to the dragons using the success of their rival company in Denmark to demonstrate their business model could work in the UK. This was the same strategy that I adopted when forming a multi-million pound charity partnership in the energy industry. I had seen the success that Age UK and E.ON had been having over several years; generating millions for both the company and its charity partner and used this to demonstrate to other energy providers that the model could easily be replicated. It is worth noting that, in this example, we didn't take a carbon copy of the Age UK/E.ON relationship therefore the partnership is still thriving today.
Understand what you need from them, and what they can offer
The Dragons often see their value as more than just the capital that they can invest into start-ups. Some Dragons do not invest because they feel that it would be too much work getting the business off the ground but most of the time they want to use their contacts, experience and skills to accelerate the business as effectively as possible. As a result of this, they will not invest in companies where they don't think they can contribute anything more than money – it’s all about getting the balance right.
Similarly, one of the great things about charity/corporate partnerships is that the company will often want to give more than just their money. This can feel frustrating for corporate fundraisers as our targets are often mainly financial. It can feel like a lot of effort finding volunteering opportunities that will be the perfect balance of not being too demanding whilst making a company’s employees feel like they’re making a positive contribution. Without this, the company may not understand why you have approached them, as opposed to another organisation or they may feel like you see them as a cash cow rather than a strategic partner. It is therefore worth investing the time in working out how they could add value beyond the financial support that you would like. Investing this time will ultimately benefit both partners in the agreement.
Dragons' Den has reminded me to always have confidence in my valuation, give context to those I am pitching to, understand my competitors, and always invest time in determining how corporate partners can contribute to the charity beyond the money that they give. I would love to hear what other fundraisers have learnt from watching the programme. Please do comment below or start a conversation with me on twitter - @MsMandyJ
I look forward to hearing your thoughts, comments and learnings.