Dragons’ Den: Series 14, Episode 7
A Startups Awards nominated business that rejected the Dragons’ offers and a product to encourage children to flush provided this week’s start-up lessons in the Den…
A Startups Awards nominated parking app business impressed in the Den this week but declined offers of investment, while a natural gel nail business and a company aiming to “change the way the world holds things” came a cropper under heavy questioning.
Just one business, a device to encourage children to flush the toilet, walked away with investment from retail tycoon Touker Suleyman.
Read on for a summary of the pitches and the business lessons you can take away from this week’s Dragons’ Den…
Concept: An app to help drivers find parking spaces
Investment sought: £200,000 for 2% equity
Investment received: None
This week’s first hopeful entrepreneur was Dan Hubert, the founder of Startups Awards nominated AppyParking.
Looking for £200,000 for just 2% equity, Hubert’s app was on a mission to save drivers some of the 347 days and £37,000 on fuel they waste looking for the perfect parking spot – claiming to reduce average search time from 30 minutes to 30 seconds.
The entrepreneur certainly piqued the Dragons’ interests when he revealed that the UK parking market is estimated to hit £900bn by 2025 and explained that their investment would help AppyParking become the “world’s best parking marketplace” and capitalise on this enormous potential.
Sarah Willingham was impressed by the apps ability to filter results by price, time and day and its level of data knowledge: “I use apps at the moment, when I’m in London, which tell me where my nearest parking is. […] It’s nowhere near the sophistication of yours”.
With the company’s parking space sensors only currently rolled out across Coventry, Nick Jenkins wanted to know if there was another way it could monitor empty parking spaces without. Hubert revealed that AppyParking has just partnered with Vodafone, Westminster and Pimlico Plumbers to turn vehicles into sensors. Jenkins: “OK I grant you that’s really clever – that’s brilliant”.
Meaden was the first to raise a concern: “It’s quite a resource hungry business isn’t it. […] I think you’ve got a big mountain to climb”. And shortly after the first to exit the deal: “In my experience it takes twice as much and twice as long. You’re going to need a lot more cash than is ever going to interest me. I won’t be investing. I’m out”.
Willingham was clearly won over by the business and a confident Hubert, but didn’t think she could add much value: “Either I continue to invest as a passive investor or I get diluted by an enormous amount very quickly. It’s not for me – I’m out”.
With a £10m valuation, Touker Suleyman questioned Hubert’s motives for being in the Den: “I’m just saying to myself: ‘He’s not here for the money’. Are you willing to give up 15% of your business for £200,000?”. He wasn’t. Suleyman also left the deal.
Peter Jones: “I like it a lot. I think you’re onto something. But, there is a risk to anything here and there are many companies […] that sadly don’t get anywhere. I’m not convinced that you’re one of those. I genuinely believe that you’re going to get somewhere”. Citing his contacts with Google, Jones offered all the money, but for 20% of the business – adding that he’d be happy to share the deal with Jenkins, who happily agreed.
Hubert mulled over the offer, which was 10 times the equity he’d initially offered, and was forced to decline, countering with an offer of 5% between them. The Dragons dropped to 15% between them but the entrepreneur wasn’t prepared to go any higher. He walked away without investment.
Start-up business lesson: Hubert’s confident pitch and £10m valuation clearly impressed the Dragons’. Despite not securing investment, he went into the Den with a plan and didn’t bow to the pressure to give up more of the business than he was comfortable with.
Company: WellGel London
Concept: Natural gel nail solution
Investment sought: £70,000 for 35% equity
Investment received: None
Next into the Den was Kent-based entrepreneur and former car sprayer Mustafa Mehmet, with a highly durable all-in-one gel nail colour range.
Non-toxic, chemical-free and with an application time of just 15 minutes against current systems’ 40 minutes, the entrepreneur’s product was aiming to provide a “healthier, faster alternative” to the existing £453m gel nail industry.
Meaden: “I’m fascinated. How did you get into nails?” Having sprayed cars for McLaren, Mercedes and Ferrari, Mehmet explained that he wanted to understand how the paint stayed on the panel. He studied paint, rheology, and applied the science to the painting of nails instead of cars after an unpleasant experience in a nail salon.
Willingham rebutted the entrepreneur’s claim that it was the fastest application on the market: “I know it’s not […] So is your point of difference the environmental bit?” Not just that, he said, but that it was the only product of its kind suitable for pregnant women.
Meaden was also skeptical about the products natural and non-toxic credentials, prompting Mehmet to produce the documents that could support his claims. While she scanned the pages, Suleyman had questions about how the entrepreneur would pay himself.
Suleyman: “You’re going to struggle. I think £70,000 is not enough. You’re going to need £300,000 to £400,000 to have any chance of getting this out there”. He became the first Dragon to exit the deal.
Jones discovered that Mehmet owned 50% of the formulation, which had been co-developed with a laboratory in China: “So half of this is owned by somebody else?” Stating that it seemed “too good to be true”, Jones also declined to invest, followed by Jenkins.
Willingham: “I just can’t get there because I don’t think it’s faster than others on the market and I think there’s so much competition out there already doing what you do. […] I’m out”.
Having finished her close inspection of the paperwork, Meaden revealed she wasn’t expecting to read words like: “Harmful if swallowed, absorbed through skin or inhaled. […] Why would I read words like that on a natural product?”
Despite his insistence that they were generic warning for paint products, Meaden ended Mehmet’s chances of investment in the Den.
Start-up business lesson: Mehmet made big claims when he first walked into the Den about his products major selling points. Unfortunately, those claims didn’t hold up under closer scrutiny and the Dragons lost faith. If he was clearer from the start, perhaps the entrepreneur could have won them round on its other qualities.
Concept: Ergonomic hand holding device for drinks trays and tablets
Investment sought: £75,000 for 7.5% equity
Investment received: None
Next to face the Dragons was Edinburgh entrepreneur Alison Grieve, with her sights set on securing investment from Jones.
Grieve opened confidently, explaining the “mission” behind her company Holding Hands: “To change the way the world holds things”. The company was started in 2010 with the Safetray – a patented food service tray that doesn’t topple over but is still stackable. It achieved revenues of £300,000 and distribution across 17 countries. It was whilst travelling with the product that she bought a tablet to help her work but found it inconvenient to hold.
She developed the G-Hold: a rotating handhold that can be fitted onto any size of tablet or e-reader. After a successful campaign on Kickstarter, Grieve hoped the Dragons investment would help fuel the company’s global growth.
Her preferred Dragon was first to pipe up. Jones: “I have a site that sells a lot of ‘gadgety’ type things all over the world every day, 170 countries […] This isn’t really practical. If you’re going to use a pad, you’re going to want to use both hands. It’s very specific and I’m not sure there’s a wider use for it”.
Grieve countered that the biggest growth in tablet sales had been for industrial applications and that Royal Bank of Scotland had recently bought a number of units to trial with their customer service. She added that people had started to develop ‘tablet neck’ from looking down at their tablets. Jones: “That’s a poor argument really. […] If you even think that your product will resolve that issue, I think that is more than just overselling it. I think that it’s really a very tiny fragment of an opportunity in terms of its market”.
Suleyman was more interested in the Safetray, discovering she’d received £230,000 to license it, but this led to other revelations – Grieve parked the product after a year due to problems with the manufacturing and moved onto the G-Hold. Jenkins: “This is what I don’t understand. Why would you not focus on the thing that you’ve already proven?”
“It doesn’t make sense”, Meaden agreed: “Which bit of that picture do you think any sane investor would get? […] You have not presented a clear case to me, I won’t be investing”.
Jones followed: “This is never going to be a volume product. It looks ugly, it’s not usable and frankly at the moment it’s a very targeted market and it’s a very small one. I can’t invest in something like this, I don’t believe in it”.
Willingham was next to exit the deal, unable to understand why she abandoned the Safetray, followed by Jenkins.
Suleyman was more positive about the product, but ended Grieve’s chance of investment in the Den: “There is a use for it, I can see you selling lots of these, but I’m not going to join you on that journey”.
Start-up business lesson: Despite a confident pitch, Grieve’s decision to park a previous product with high-potential raised red flags for the Dragons about her credibility as an entrepreneur and the future scope of her business.
Concept: A device that encourages children to flush the toilet
Investment sought: £40,000 for 20% equity
Investment received: £40,000 for 40% equity
This week’s final entrepreneur was Dublin-based Jamie Lawler. The father of three said he had seen his “fair share of un-flushed toilets” and many children see flushing as a chore. He created Kidsflush: a bright unit that sticks over the top of an existing toilet button and emits fun sound effects to encourage children to flush.
As the product was pre-trading, Meaden wanted to get an idea of its potential with retailers. Lawler claimed he’d had good feedback from “somebody who used to work for Tesco”.
Jones wasn’t enamoured with the product and wasn’t convinced it would have the desired effect: “A button for a button. […] I think it’s crazy. […] they’d do it once or twice and then get bored”.
However, Suleyman was quick to disagree: “I think you’ve got something here. I remember when my children were much younger and I was always going behind them to flush the loo”. He also wanted to know if Lawler had any ideas for other products. Lawler revealed he had some ideas to influence children to wash their hands: “We might make the water glow, or the soap”.
Jenkins: “This is a product, not a business. It’s just really too limited to be of any interest. But good luck with it – I’m out”.
Willingham: “If you can make a living doing stuff like this and enjoy it then why not, but no, I’m sorry, it’s not investable, I’m afraid I’m out”.
Jones: “I admire the fact that you’re coming up with ideas, but this is not a good one. So, unfortunately I’m out”. Meaden followed her three peers.
The product’s biggest fan Suleyman said he was “right on the line”. Encouraged by Lawler’s admission that the company had no real debts or costs to speak of he made an offer – all the money for 40%.
The entrepreneur accepted the retail expert’s offer.
Start-up business lesson: Although the other Dragons couldn’t see a huge market opportunity for his product, Lawler’s enthusiasm and inventiveness was enough to win round Suleyman, who saw potential in his future ideas.