Bingo! Dragons Den Theo Invests £200K In Affiliate Site!
Posted under: Anyone who watched Dragon’s Den last night would have seen affiliate company Gaming Alerts pitch to the Dragon’s and then amazingly walk away with £200,000 of Theo Paphitis‘ money in exchange for 30% of their business. Initially Emmie & Ed Stevens wanted to offer 10%, but after some tense bargaining, they managed to secure the deal.
Like Kieron I was quite stunned to see what essentially is 4 gaming affiliate sites obtain £200,000 based on little more than a few wild stats about online bingo players and some impressive projections on revenue in the next 3 years (they expect a £3million profit in year 3).
I have come across Gaming Alerts whilst running the 3 bingo sites we have, including Prize Bingo, plus the 3 bingo white labels we also own (e.g. Prize Bingo). Never in a million years would I have thought that their business would be currently worth over £650,000 (based on the 30% investment made by Theo). A close look at their sites (Casino Alert, Bingo Alert, Bookies Alert and Poker Alert) and apart from the download, which many observers rightly suggest perhaps isn’t that great, there’s not a lot there that can’t be put together fairly rapidly! The sites are well designed, but 117 registered members in a forum doesn’t suggest that they’ve made much effort to develop a community prior to this funding.
If you look at the bigger players in the casino and bingo arena (e.g. Which Bingo) then they, this morning, must be rubbing their hands at their own potential valuations. (Of course a business is only worth as much as someone is prepared to pay for it).
There are better bingo, casino, poker and bookmaker sites out there! Is £200,000 going to be enough to take on those players? By appearing on the show the service will get some interest, but probably only from entrepreneurs who are now going to go “wow, gaming online seems big business, let’s have a slice of that” and that’s going to possibly impact the market with a bundle of me too services.
On top of that, you have to remember that Google is now quite restrictive about gambling PPC, so the SEO market has become very competitive for gaming related terms (and who knows what they’re bring in next!). Most certainly some of our gaming placements have been pushed downwards in recent months, not because of affiliate/portal sites, but because of the casino and bingo sites now pushing their way upwards.
No one can take it away from Gaming Alerts that they’ve done well. Not only have they been able to promote their business in the den, but they secured the funding that they wanted.
It does look like they’re already spending that money on PPC though…
… it will be interesting to see how things progress.
I must admit first when I saw it, I chuckled thinking to myself ‘Not a chance’. I was completely stunned by the investment and can honestly say that personally I think it has to be one of the worse investment deals any of the Dragons have made.
Hats off to the two salesmen who managed to, in my eyes, baffle the Dragons as to what they were actually investing in. Just wish I was that good at pulling the wool over peoples eyes…
I actually stopped watching Dragons Den a couple of series ago after I found out that very few of the deals actually go through. Once the initial offer is made one of three things happens.
1: very rarely the deal goes ahead
2: the investor pulls out after going through the accounts witha fine toothcomb
3: the owner pulls out after gettinga better deal from another investor
I’m guessing it will be number 2 for this deal.
Utterly amazing! Hats off to them for getting the money but I’m not sure that £200k is enough to take on the large sites out there. However, having a big name backer may just make the difference and if Theo takes a hands-on approach into working the business up you just never know. It’ll be heavy going though!
Well done for not failing for link bait
makes you think all the same, even if they see none of that money, I bet you will find loads of people will have wrote about it and linked to them. Oh look is that a trail of people running to get on the show LOL.
A similar thing happened in the last series. A guy came on selling his ‘poker in pubs’ business, which any fool could see was easily copied. What clinched the investment was when he said he had agreed a deal for a payment from online casinos when anyone signed up from his website. All he’d done was put up a few affiliate banners, and the Aussie bloke fell for it hook, line and sinker.
They may be experts in their respective fields, but they really need to take advice when it comes to internet businesses.
Whilst it’s nice to see investment within the Affiliate Marketing channel, it appears to be a crazy investment – one of the key questions IMO was the failure to ask about customer acquisition.
200k won’t get you very far, especially for a service which offers no distict value add.
Hi Jason
I know I’m VERY late on this but I totally agree with you on all of what you say. A not particularly good set of affiliate sites and a third party download software (which we looked at and decided against quite a while ago) for £200k investment based on as you say ‘wild’ stats.
But dont forget, every £100 they make they have to give TP £30 of it !! No thanks. I’d rather have all £100.
Oh and thanks for the ‘bigger’ players mentioned
Phil