Dragons Den scandle of investments are in fact loans for stock.

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11 points·HNer··6 comments

This doesn't sound like a loan to me - it sounds like a contract where the party buying equity is given priority on dividend payments, which as I understand it is reasonably common.

Of course, the money not actually appearing is a different matter.

When someone asks if you need a lawyer, it's not actually a question.

These companies are really unlikely to ever get acquired, how, other than with a loan, are the investors meant to get liquidity on their investment?

> unlikely to ever get acquired

Not true, if you have a cash flow positive business, it can and will sell for the right price (not nearly what a public company trades for though unfortunately.)

Also, how about dividends?

I watch the Canadian or US (not sure which it is) version of this show and I have encountered several of the products I have seen on the show later in stores. Just this weekend, I saw some childrens play-dough (there was something special about it that I can't recall) being sold in Costco. This product was developed by a young guy living in a small town of about 200 people. Getting a product into a store as big as Costco is a godsend for most people. Even if you have to give up 80% of your company, you'll likely still do better in the end.

It seems the British version of this show is a tad unscrupulous however.

I think at the worst, this shows one member of the Dragon's to be unscrupulous. Duncan Bannatyne has posted a copy of his contract on his personal website, which shows a normal equity stake.

James Caan on the other hand has spent his time and resources trying to get the book banned (at least according to Tweets by his fellow Dragons).

"Well, you're not going to rip me off are you, because you've got a lot more money than me."

That's pretty faulty reasoning.

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