"Die Höhle der Löwen" is damaging the start-up scene

The twelfth season of the start-up show "Die Höhle der Löwen" is currently underway. However, the show is not helping the image of founders - on the contrary.

Since the end of August, the start-up show "Die Höhle der Löwen" has been back on Monday evenings on the private channel Vox and as nice as it looks like a start-up scene, it is far from it. Because neither the initiation, nor the pitch, nor anything about this show shows the start-up world in the slightest - and that is a problem.

For TV viewers, it would probably be boring as hell to follow the often rocky road of an investment, which is why this abbreviated investment process is shown on camera, consisting only of pitch and handshake. However, this simplification creates a false image of the start-up scene - one that could have a demotivating effect on founders who prefer to shine with good ideas rather than big words. The show is therefore not doing the start-up scene any favors, on the contrary: The Lion's Den is doing the start-up scene a disservice.

Nose hair remover or furniture for cats: The products on DHDL are curious

It starts right at the beginning, with the products that the founders pitch. Here is a small selection: Nose hair remover, furniture for cats, a training device for pelvic floor muscles, snacks that humans and dogs can eat together, cosmetics made from breast milk, non-slip socks and a foldable kayak.

What is immediately apparent here is that these are all products that are aimed at consumers, i.e. so-called B2C products. German start-ups generate the majority of their turnover in the B2B sector: around 71.5% of turnover is generated with business customers, according to the German Startup Monitor (DSM), for which almost 2,000 companies were surveyed.

What also emerges from this survey is that two thirds of the start-ups surveyed have a digital business model and the dominant sector is information and communication technology - meaning that reality and show are in absolute opposition to each other.

"Die Höhle der Löwen" has about as much in common with the start-up world as "Germany's Next Topmodel" has with modeling.

Of course it does. A few of the "Höhle der Löwen" business models are of course also digital, such as the "Uniheld" app, which students can use to get discounts and offers. But the majority of the founders present analog products and business models in their pitches. After all, the audience wants to be entertained. In the evening, over a bag of potato chips and a glass of wine, very few people in the audience feel like having complex software solutions explained to them that may not even be of interest to consumers, but only to some logistics company that can use them to speed up its processes. Yet these are actually the ideas that are successful in reality.

The selection of business models presented alone shows that "Die Höhle der Löwen" has about as much in common with the start-up world as "Germany's Next Topmodel" has with modeling. Of course, GNTM has also produced some models who are now successful on international catwalks and not just promoting fitness tees on Instagram. There are also successful start-ups that became known from "Die Höhle der Löwen", such as Ankerkraut.

The show has produced many flops

However, the Vox show has also produced many flops. This is shown by calculations from the credit rating agency Creditsafe. According to these calculations, the risk of going bankrupt in the next twelve months is 2.5 percent on average for start-ups that landed a deal on "Die Höhle der Löwen". By comparison, the average figure for all German companies is 1.25 percent.

In the past eleven seasons, 53 percent of the business ideas aroused the interest of the investors from the jury and received a deal. However, this often fell through after the fact, in around 20 percent of cases to be precise. Even in the current season, several deals did not materialize after detailed negotiations following the show.

It is not surprising that so many deals that are concluded in front of the camera are dissolved behind the camera: the "lions" - i.e. the investors from the show - make their decisions in less than an hour. They receive hardly any information about the founders and their idea before the show - the only basis for the investment decision, which is made far too spontaneously, is the pitch that the founders present in the show. This is about as realistic as the walks from "Germany's Next Topmodel", which are often more reminiscent of obstacle courses from "Takeshi's Castle" than catwalks in Paris.

So it's not quite as spectacular as in "Die Höhle der Löwen", because investors generally don't want to see a good show, but want to get to know the founders and their business idea better.

In reality, there is a much longer, more complicated path between an investment by venture capitalists and the first contact with the start-up. The companies often apply to the investors themselves or are selected by the investors. The first start-ups are weeded out at this stage, for example because the business model is not as promising as expected at second glance. Only then is the first contact made and the founders can pitch their idea to the investors. This is not quite as spectacular as in "Die Höhle der Löwen", as investors generally do not want to see a good show, but want to get to know the founders and their business idea better. Important documents such as financial plans and market analyses are usually already available to investors before this pitch.

Does the scene really want to be so riotous?

And yet: investors do not make their decision immediately after the pitch, but often only a few days or weeks later. In the meantime, the founders have to keep submitting documents, such as marketing concepts, and answering questions. Only then do they receive a "deal" - which in reality is called a "term sheet" and is a kind of pre-formulated contract. The founders often even discuss this team sheet with their lawyers before making a decision. This step is followed by a more thorough due diligence process, and only then is the financing in the bag.

Despite the reach it has created for the topic of start-ups, the start-up scene should ask itself whether it really wants to be represented by this program.

So what remains of Germany's most successful start-up show, apart from a distorted image? Despite the reach it has created for the topic of start-ups, the start-up scene should ask itself whether it really wants to be represented by this show. Or whether it should create its own image, a more sober, less riotous one. One that conveys that you don't need an extroverted personality to found a company, but rather a good idea.