Dragons’ Den: Series 15, Episode 4

What makes a winning pitch? And how do you stand in front of prominent business leaders and convince them to invest in your start-up business?

On the latest episode of Dragons’ Den, two businesses – dock & bay and Lovebomb Cushions – each snared Dragon investors and walked away from the show collectively £155,000 better off.

To help you understand how you too can create a investment pitch that wins over investors, we’ve taken a closer look at the BBC show’s latest success stories…

Dragons’ Den success story: dock & bay

Founders: Andy Jefferies and Ben Muller
Concept: Beach and travel brand specialising in micro-fibre towel products.
Investment sought: £75,000 for a 5% equity share
Investment received: £75,000 for 10% (Deborah Meaden)

The winning pitch

On a mission to completely re-invent the traditional towel, the first winning pitch of the episode was achieved by laid-back entrepreneurs Andy Jefferies and Ben Muller.

Inspired by travels abroad were they had found that their usual micro-fibre towels were “small, dull, would collect smell, were unappealing at the beach, took up too much room to carry and took ages to dry”, they decided to create a solution.

This solution is their brand dock & bay which retails a signature micro-fibre towel two metres in length, – said to be the biggest towel in the market – absorbs three or four times more water than a normal cotton towel, and is a top seller on Amazon.

Targeting the “worldwide $22bn beach and swim market”, Jefferies and Muller had launched the business after meeting while working in a bank and decided that banking wasn’t for them.

While the pair accepted feedback from Jenny Campbell that the towels “didn’t feel like what you’re used to”, Muller used an analogy to convince the Dragons’ to see their way of thinking; “You don’t just have one pair of shoes; you have flip flops for one purpose and boots for another and if you’re looking for a compact, portable towel then ours is number one.”

Following greater interrogation into what they wanted the investment for, to which they explained “we’re at a turning point in our business and some mentoring and guidance would be key so we can take our brand to the next level”, the pair soaked up three bids from the investor panel.

Ultimately it was Deborah Meaden’s offer of 10% equity in exchange for the full £75,000 target amount that saw Jeffries and Muller announce a deal; and didn’t see them leave the Den high and dry!

Company finances

• Last financial year: £1.1m turnover with £330,000 net profit. 80/20 split between sales made on Amazon and sales made via the company’s website.
• A two metre dock & bay towel retails at £18, landed cost to make the towels is £4.40. Wholesale price is £7.50.

What the Dragons’ said:

Jenny Campbell: “You’re not the first bored and disillusioned bankers to come into the Den; I know what great entrepreneurs we make! On the product, I love the vibrancy but it doesn’t seem very welcoming to me. A towel needs to feel cosy and I feel like I’d be wearing a flag.

“I think you guys are great and the product is professional but I can’t get excited about a towel sorry, so I wish you every success but I’m out.”

Touker Suleyman: “You’ve got a good enough [profit] margin. You’re doing £1.1m turnover and you’re making £330,000 a year on a million turnover, you don’t need a Dragon!”

Peter Jones: “You’ve clearly got a business but what’s the future of that business if somebody went toe to toe with you on Amazon? My feeling is that you would actually lose a lot of business overnight. You’re not fending off any competition like Touker could probably bring this out very quickly I would imagine. What would happen if he did?”

Touker Suleyman: “I know the textile business very well but I know a lot more but I don’t want to embarrass you. I would give you all the money for 25%”.

Tej Lalvani: “I think I can help you with building the brand because that’s what I do. I’m going to make you an offer. I’ll offer you all of the money for 15% but if I get my money back in three years, I’ll drop it down to 10%.”

Deborah Meaden: “I think this is very interesting, you’ve done a fantastic job. I’m going to make you an offer of the full £75,000 but I want to keep you completely motivated and I get a sense that you wouldn’t be all time-consuming so I will offer you 10% of the business.”

Dragons’ Den success story: Lovebomb Cushions Ltd

Founder: Sarah Agar-Brennan
Concept: Novelty plush goods based on emojis
Investment sought: £80,000 for a 10% equity stake
Investment received: £80,000 for 30% equity (shared between Tej Lalvani and Jenny Campbell)

The winning pitch

The second Dragons’ Den success story of the episode goes to founder Sarah Agar-Brennan, whose business Lovebomb Cushions brings emojis to life through novelty plush goods.

Lovebomb currently holds the UK licence for the emoji company and encompasses cushions, foot cushions, beanies and key chains – generating “in excess of £500,000 in the first year of trading”.

Agar-Brennan explained that her management team have over 50 years’ experience and that she was a serial entrepreneur; having previously ran businesses and won business awards: “I feel I’m well placed to help Lovebomb Cushions realise its potential in this profitable market.”

Having initially created some awkward tension by saying she felt the Dragons’ “were better than her”, Agar-Brennan then found herself in a more uncomfortable position after revealing that a decision to part ways with a distributor had negatively impacted revenue. In fact, revenue had dropped from £526,000 to £90,000 of revenue for the second year trading.

While the reveal of the company finances dismayed some of the Dragons’, Agar-Brennan was keen to show she had the grit to take her start-up venture where it needed to be: “It’s difficult because I’m standing here saying I haven’t got the figures but I know I can get the figures.”

This grit was further demonstrated when Agar-Brennan shared her background. The entrepreneur had previously ran a Star Wars collectable business but sold the business to take time out after her son’s unfortunate death. “During her darkest days”, she then started a skateboarding coaching business and explained she was now the lead coach educator for the National Governing Body of Skateboarding.

The female founders’ determination to succeed against the odds was enough to convince Tej Lalvani, Jenny Campbell and Peter Jones to all make offers of investment. After ‘talking to the wall’, the emoji entrepreneur opted to bring on the Dragon duo of Lalvani and Campbell as investors…

Company finances

• £526,000 in the first 12 months of trading with £240,000 gross profit.
• £90,000 revenue for second year of trading (nine months in).

What the Dragons’ said:

Deborah Meaden: “Never stand in front of investors and say ‘you’re better than me’, say more ‘experienced’ maybe but never ‘better’. That was a poor choice of words so never say that again.

“When I heard of the £90,000, I didn’t automatically assume that your business had collapsed but you have lost a big distributor and you haven’t got a lot of time at all to fill in that gap. You haven’t really convinced me so I won’t be investing.”

Touker Suleyman: “You’ve come in here with a valuation of £800,000 and I would say this is never worth £80,000 – it might be worth £100,000 for the whole lot. If your business deteriorates, you’re in trouble. It’s a shame because I was your best Dragon for this. I’m out.”

Tej Lalvani: “I like the quality of toys and I could imagine my kids having fun playing with them. I’m concerned about this year’s performance and the huge drop in sales but I think you’re very investable and something tells me you’re going to keep striving to make it work. I think I should take a chance on you but I want to de-risk it and I would want another Dragon on board.”

Jenny Campbell: “I’m seeing red flags all over this business but when I took over my business it was losing £7m and there were many years of graft to turn it round into a successful business. In the end it was rocking and rolling. You deserve somebody behind you help you achieve that.”

Peter Jones: “It’s good you’ve got cushions so you can have a soft landing! The reality is that your business has had a fantastic first year and not a very good second year. You’re a tenacious individual though.”