Dragons’ Den giving start-ups false hope

BBC show encourages natural optimists to start ventures that are unlikely to succeed, say researchers

Dragons’ Den is encouraging too many “wishful thinkers” to set up businesses doomed to fail, a study suggests. The BBC TV show, where aspiring entrepreneurs try to win backing from five millionaires, is full of “people overestimating their ideas and their ability to make money”. Academics at Bath University, London School of Economics and Cardiff University found that this type of optimism was leading people to set up businesses with no realistic prospect of success.

DRAGONS’ DEN is encouraging too many “wishful thinkers” to set up businesses doomed to fail, university researchers have suggested.

The popular BBC TV programme, where aspiring entrepreneurs try to secure financial backing from five millionaires, is full of “people overestimating their ideas and their ability to make money”.

Academics at Bath University, London School of Economics and Cardiff University, found that optimism – like that seen on Dragons’ Den – is leading people to set up businesses with no realistic prospect of success.

Dr Chris Dawson, Associate Professor in Business Economics at the University of Bath, said “the biggest chunk” of Britain’s business failures was the result of overly optimistic people thinking they can start them at all.

He said: “If you are an optimist, then watching those shows may well encourage people to enter selfemployment. As a society we celebrate optimism and entrepreneurial thinking – but when the two combine, it pays to take a reality check.

“Every episode provides examples of such wishful thinking. Pessimism may not be seen as a desirable trait, but it does protect people from taking on poor entrepreneurial projects.”

Tracking people as they move from paid employment to setting up their own business, the study found that business owners with above average optimism earned 30 per cent less than those with below average optimism.

The findings could help explain why only 50 per cent of businesses in the UK survive their first five years.

In 2016, 414,000 businesses were set up in the UK, against 328,000 business failures in the same year, according to the Office of National Statistics.

Dr Dawson added: “You watch [Dragons’ Den] and, if you are more of a realist, you wonder why on earth did these people think this idea would catch on? They think they have great ideas because they are all optimists.

“Even people who do get money in Dragons’ Den, they are successful in securing venture capital. But then only 5 per cent of those businesses end up making any money.”

The study also criticised the Government’s “far too encouraging” approach to entrepreneurship.

David de Meza, an LSE professor, said: “The personal and societal fallout of failed businesses shouldn’t be underestimated, which is what optimists do. It’s far too easy to get small start-up business loans now. What the Government really needs to focus on is creating much fewer startups but higher quality and higher chances of success, which ultimately create jobs and wealth.”

A spokeswoman for the BBC said: “Dragons’ Den is an entertainment show that makes it clear that you need more than just an excellent idea to stand a chance of succeeding in business. Many budding entrepreneurs have suffered the wrath of a Dragon if they’ve presented a poorly thought out business plan.”