He's breathed fire on Dragons' Den and gained a reputation for his no nonsense approach to investment but Doug Richard has also been a formidable force in helping many young British businesses get started. Verity Gough finds out more.
Life after the Dragons
When Dragons' Den was first screened in the UK, Doug Richard was the one character that stood out - and it wasn't just his Californian brogue that marked him apart, it was his cynical attitude towards the would-be entrepreneurs and his reluctance to take a 'punt' on some of the more 'frivolous' pitches.
But after sticking it out for two series, Richard left to pursue his own projects and his seat was soon filled by 'nice-guy' Richard Farleigh. Since then, while the show has gone on to achieve mainstream popularity, it has attracted disdain from the business community – and from Richard himself - for diluting the business content in favour of entertainment.
"I always thought that the challenge of Dragons' Den has been that entrepreneurs come and go but the Dragons don't and the show would have remained fresher if each new season there were more dragons. Unfortunately, the producers didn't have the nerve to shift it out," he reflects.
"From the show's point of view, they are silly. They should have continued to revolve dragons, to get some fresh people on the show which would have given it a raw feel and a cool dynamic. Keeping the same people and place, I'm not surprised it has become cartoonish because up to a certain point they are actors and the whole thing becomes a staged event."
Whatever criticisms are levelled at the programme, it has gone on to create celebrities out of both the Dragons and entrepreneurs. So is Richard even a tiny bit regretful of leaving when he did? "I left because I got bored," he laughs. "I don't want to sit in a chair for six years – I have a life. I did it, I enjoyed it, it was fun and I moved on. The notion that this would become my life never even entered my mind."
Extra curricular activities
Now three series later, the Den is all but a distant memory and Doug Richard has continued to carve a name for himself as a serious investor and a keen supporter of small businesses. But his interests don't stop there.
Last year he was invited by conservative leader, David Cameron to provide the Richard Report, a somewhat controversial review into the state of small business support in the UK. In addition he has also become a name to be reckoned with in his adopted town of Cambridge having become a member of the well-respected Cambridge Angels.
His latest venture has seen him team up with East of England Development Agency (EEDA) for The Big Fish campaign for entrepreneurs, which aims to make business support, advice and funding more accessible, particularly during the current economic turmoil. However, despite words of warning from all corners, Richard believes that rather than fear the downturn, fledgling businesses should embrace it.
"We are all prey to getting fat easy, particularly when the tide is rising and there is lots of money flowing," he says. "But when you start-up in a downturn, it creates a much sharper business. And if you can sell something to someone during the harder times then you are validating the business at its worst point - everything else is up from there on in. It ensures you are starting with the key, proper fundamentals in place. You can have a differentiated proposition, it's effective, it sells, it's worthy."
To that end, he suggests that budding entrepreneurs take advantage of the free advice available to them: "It's important that those people in the process of starting their businesses get as much support as they possibly can so they have more likelihood of success," he says.
Richard's conviction to the small business cause is refreshing, and unlike many other successful entrepreneurs in the public eye, he has not sold his soul to the media devil. In fact in May 2006, he was presented with the Queen's Award for Enterprise for his work promoting, developing, and helping entrepreneurs.
So between his political engagements, running his company, Library House and his Cambridge Angels' work, what else can we expect to see from this effervescent entrepreneur?
"I have invested in lots of exciting things over the years the most recent being a web TV company," he enthuses. But despite being pressed to divulge the details, he remains tight-lipped, "It's still in stealth mode so I can't really tell you much about it." Somehow, we think this won't be the last we see of Mr Richard.
We gave members of UK Business Forums the chance to ask Doug Richard a question. We picked out four of the best and Richard's answers are below.
Q: Do you think there is a place for diverting funds, particularly from government agencies, to offer some kind of tax breaks to businesses in their early stages of profitability and growth?
Nick Palczynski, Boomerang Video
DR: "There's a pretty strong case to be made for lower small business corporate tax rates generally because it has been shown over and over again that if you lower the tax burden on small biz they inevitably grow faster – this is macro economics of 30 years ago. But is it a good thing to do? Yes. Should it be a special exemption for small businesses in the starting phase? Probably not. I don't think there is an equitable or logical case to be made for that but it's impossible to know where to draw the line. The government hasn't acted on it because we have a government in place that thinks there is a political solution to every problem – they are over empowered to solve problems and therefore put in place 3,000 solutions delivered by 2,000 entities – much of which has no follow through or effectiveness measure so no, they haven't cut back and they haven't been effective not because it's difficult but because they are philosophically starting from the wrong point of view."
Q: The recent Dragons' Den investment of £150,000 in Rapstrap for 50% equity, followed by a massive order for £36m, which was from a manufacturer where the Dragons have a vested interest indicates to me that the contestant, who had spend 20 years developing his product - got a bad deal. Do you agree that despite the Dragon's connections, theirs is a privileged position that they take advantage of and that their money is very expensive, more so even than 3i and other high-risk investment houses?
Dennis Broe-Ward, Virtualstrata
DR: "The answer is no. The thing that is very startling to people is to understand what it costs to get risk capital. Dragons' Den is a perfectly honest and straight forward portrayal of risk capital – what people don't understand is that the Dragons are in a very unusual situation; they are essentially acting like Angels or venture capital investors but they are investing in businesses that would never usually get the capital at any price. This is an opportunity to get capital that you would never simply get and in the real world investors simply wouldn't touch these small businesses – myself included – it's only because they are doing it in the frame of a TV programme they are willing to try at all and therefore the cost in high equity is perfectly rational in this situation because it's the only thing that they can do to offset the risk, not that I have a strong view on the subject!"
Q: Expansion of any business needs to be strategic and carefully planned and can sometimes involve risk. What key ingredients would you use as a checkpoint for validating any plans of expansion in the interests of success?
Roz Mita, Mannakin Ltd
DR: "At the end of the day, the most effective measure of developing capital is return on capital invested. So if you ask yourself "should I spend this money?" you want to look at quantative analysis of how much money will that money make, how much revenue will that create, how much profit will that capital create and over what period of time? Then you can look at the return on the capital invested, which is essentially how much profit over what period of time will be created by the capital."
Q: Have you ever felt like giving in when the going got tough and what was it that made you continue? How did you change your mind set to overcome obstacles that you struggled earlier with?
Iain, The Williams Holidays Team
DR: "When things are awkward, what keeps me going is that I don't really have much of an alternative. Most of my life I have had people who have depended on me: a wife, small children, a mortgage to pay. I didn't wake up in the morning and go, I'm tired, I'm going to quit now, I woke up saying bloody hell I have to go make some money. It's rarely the case of 'do I need inspiration?'; it's usually a case of 'I have a bill running after me!' Fear of failure is far more of a motivator that aspiration. The only people in this modern day and age who feel comfortable in their lives are the ones that work for the government and can't be fired. The fact of the matter is, as the last few weeks have proven, there is no security. Any of us could lose our jobs at any moment and the people that are the most optimistic are the youngest ones with the least responsibility and everyone else is burdened by the knowledge that they have to wake up in the morning and make a living for them and theirs."
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