An entrepreneur requesting £100,000 for £500,000 is offering 20% of the company in Dragon's Den.
The calculation uses the investment as a fraction of the stated valuation: £100,000 divided by £500,000 equals 0.20, or 20%. In a pitch, the founder is effectively saying that the requested cash represents one-fifth of the business's value.
This kind of arithmetic matters because Dragons assess whether the proposed valuation is reasonable. They compare the requested stake with revenue, profit, assets, growth prospects and the amount of work needed to develop the company. A Dragon may accept the valuation, make a counteroffer, or decline entirely.
The percentage offered is equity, meaning ownership rather than a loan repayment. If two Dragons jointly invest for the same total stake, they may divide that stake between them. The numbers shown on screen describe the proposed deal, while later due diligence can still affect whether the investment is completed.