Investors might pay $200k for half a restaurant or some other business like that, but not a startup.
I have seen the show and my observation was: The dragons are really mostly into funding sauce-makers, innovative clothing accessories, etc. and they apply the same principles to startups -- doesn't work well.
I've never seen a startup accept funding from them, its either an inventor who gets access to a particular store or a mom & pop shop.
http://www.youtube.com/watch?v=Z9EkablfWVk - Part 1
http://www.youtube.com/watch?v=lj8MNEgiDTU - Part 2
They tried to counter at 30% but decided to take the $200k / 50%
As funny as that whole thing was, the prof was right to break that deal. This company wouldn't have gone anywhere anyway with that kind of a structure.
The professor was right on so many levels. That 200K wouldn't last three to four months. Rent, salaries, hardware, etc.
That said, the professor was slightly insulting, but I don't think his position was wrong at all.
It utterly depends on what stage the company is in. If it's a few guys and a prototype, $200k of seed money for 50% isn't necessarily a lousy deal.
And, for the record, it could last quite a while. 3-5 young guys making rice-and-beans money, cheap rent, 2-3 servers at ServerBeach...
The "professor" was insulting and controlling-- he raised the VCs' hackles, which isn't going to move the meeting in the right direction. If he had a problem with the valuation, he should have raised the concern before they'd issued the check. That's bad faith negotiating.
Instead, he went ahead and torpedoed the deal without the founders consent. It certainly makes for good television, but I'd be pissed if I were one of the founders.
As it happened, I guess it was uncomfortable for them to discuss, so this scene, which is just about the worst-case scenario, came to pass.
"Using Web 2.0 technologies such as Google Maps, AJAX, RSS and tagging, you'll find the perfect job based on where YOU live."
This hurts me.
