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Kevin O'Leary: He's not a billionaire, he just plays one on TV Add to ...

The idea underpinning Dragons’ Den is that the contestants receive money from the dragons if an on-air deal is agreed to. In reality, only a minority of deals actually close. And O’Leary has not always been astute in spotting the good ones. For example, in 2009, then-24-year-old Neil Currie and his business partner appeared on Dragons’ Den pitching an online real-time stock quote website, seeking $150,000 for 15% of their company. O’Leary said he would finance them if they would hand over 50% of the company. The young entrepreneurs agreed, but after the show, “[O’Leary] wouldn’t get on the phone with us,” Currie says. “So there was no way we were going to give him 50% of our company.” Meanwhile, the website’s subscriber numbers continued to grow and it became a profitable enterprise. By the time CBC called a year later to see if a deal with O’Leary could be hammered out, Currie wasn’t interested.

In 2011, the website did $4 million in sales. If O’Leary had bought in, he would have pocketed a dividend of almost $500,000 last year, says Currie, who is also now head of another enterprise, Stockpools.com. “Did he make the right decision? No, because he didn’t take the time to pick up the phone.

“We did dodge a bullet, that’s for sure…I’m glad he’s not my business partner.”

O’Leary responds by noting that so many deals come his way that he can’t possibly participate in all of them. “I have seen literally thousands of deals,” he says. “About a third of the deals close and about one in 17 make money. I think the national average for the venture-capital industry right now is achieving only one in 25.”

And some Dragons’ Den deals turn out differently than how they’re first conceived. Wendy Johannson and Claudia Harvey invented a glove that makes it possible to work in the garden without ruining one’s nails. They needed $50,000 when they went on the show in 2009. On-air, O’Leary agreed to give them the money in return for 3% of royalties. They eventually gave him 10% of their company, Dig It Apparel Inc. But the $50,000 never materialized. “When he said he’d like to have 10% for $50,000, I thought that would be a cash injection,” says Harvey. Instead, O’Leary offered the pair a line of credit, which Dig It has not used. “He’s never actually given us any money,” says Harvey. “He is acting as a face for our company. We can use his name and we can say ‘Kevin O’Leary is our business partner.’ For that, he has 10% of our company.” Harvey says they’re delighted with O’Leary’s participation and he has helped them expand their market and promoted their products.

O’Leary says Harvey and her partner wanted the money for inventory, which he didn’t think was a wise use of his money. “If the Dig It girls called me today and asked me for the $50,000, they’d get it,” he says. “I must say I am very proud of them.”

In any event, the outcome of specific deals doesn’t matter to ratings. O’Leary’s presence on Dragons’ Den was so compelling it caught the eye of Mark Burnett, the man behind Survivor and The Apprentice. When Burnett created an American version of Dragons’ Den for ABC in 2009, he asked O’Leary to join the cast. Now entering its fourth season, Shark Tank has become another hit for both Burnett and O’Leary.

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As O’Leary became a household name, he occasionally quipped to associates that he needed to monetize the attention. Mulling over his options, he decided to put his weight behind an asset management company. In the wake of Ottawa’s decision to tax income trusts, which had paid juicy yields to retail investors, O’Leary figured he could create dividend-oriented funds that targeted this income-starved group.

But there were two problems: O’Leary had publicly railed against mutual-fund fees for years, and he wasn’t licensed to manage money.

O’Leary acknowledges that he regularly took mutual-fund managers to task for gouging investors, but he now argues for the benefits of professional money management. Among other things, a good manager helps investors diversify their holdings across stocks and bonds, he points out. “Think of the challenge for people that let themselves own 30% of their portfolio in RIM… if you only had a 5% weighting in it forced on you by an adviser, you suffered a lot less.”

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