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Dragons’ Den: Series 11, episode 3

Only one deal this week - but did the Dragons miss a trick by turning down recipe box delivery company Gousto?

Episode 3

Just one investment deal for the cautious Dragons this week, as the majority of pitches ended in frustration – but the story of the week actually concerns a business that walked away with nothing. Recipe box delivery company Gousto failed to excite the Dragons enough to gain investment and trudged into the lift with empty pockets, only to secure £500,000 backing from unnamed food industry heavyweights just weeks later. Elsewhere, Richard Ernest’s dementia therapy product raised interesting questions about the divide between profitability and social enterprise but eventually secured investment after the entrepreneur committed to donate a portion of his profits to charity, whilst an ad agency trio’s ‘shouty-outy’ word-association parlour game turned down an unfavourable offer after failing to show the link between concept and profitability.

Timo Schmidt and James Carter (honourable mention)

Company: Gousto
Concept: Organic recipes, ingredients boxed and delivered to customers in their exact quantities
Investment sought: £100,000 for 7% equity
Investment received: None

The pitch:

Will Gousto be forever known as ‘the one that got away’? The Dragons were initially impressed by the young duo’s pitch, which detailed how customers can discover organic recipes posted on their website and then reduce unnecessary waste by ordering the exact ingredients in their exact quantities. Meaden was wowed by the company’s 99% delivery success rate and hard-to-please Bannatyne was especially enamoured with the concept.

However things started to go south when the pair revealed Gousto was running at a heavy loss, shedding £25,000 a month. With only £90,000 of initial capital left, the Dragons pointed out they could be bust in less than four months. Schmidt and Carter then decided to reveal Gousto’s trump card; the pair were also in advanced talks with veterans of the fast food industry who were set to invest £250,000 in exchange for 3.4% of the business.

This revelation did not have the anticipated effect on the Dragons. Linney immediately smelt a rat, and voiced doubt over whether they needed a Dragons’ investment at all. Jones also pulled out, pointing out that the unnamed VCs were likely to demand the same deal as the Dragons were getting if one of the Dragons were to make an offer, jeopardising the deal altogether. Meaden, and Linney followed, not convinced by the money-making potential of the business. Only Bannatyne remained – and despite his assertion he would become a Gousto customer he pulled out as he, too, was unconvinced by Gousto’s commercial potential.

Schmidt and Carter entered the lift empty-handed, having been rebuffed by all five Dragons. Their dejection was not to last, however. After concluding the £250,000 deal mentioned in the show, the pair raised a further £250,000 from undisclosed figures in the food and drink industry and Gousto now looks to be on the path to success.

Start-up business lesson: Investment from multiple angels or VCs is a delicate process – be upfront about any deals you have in place from the outset, or it could come back to haunt you

Richard Ernest

Company: Rempods
Concept: ‘Reminiscence’ products for people with dementia
Investment sought: £100,000 for 25% equity
Investment received: £100,000 for 45% equity with incentive to claw back equity if profit targets hit and commitment to donate 10% of profits to charity (Peter Jones and Deborah Meaden)

The pitch:

  • Despite only being able to produce anecdotal evidence that his ‘reminiscence pods’ actually helped people with dementia, Ernest soon assuaged any worries when he revealed a highly promising set of figures; deals with NHS trusts and care homes across the UK meant turnover was expected to exceed £1m next year.
  • The entrepreneur caused discomfort for Jones, however, with his insistence that the business’ end goal was purely commercial profit, despite the potential of the product to change lives. Jones was impressed by the product but unhappy at the idea of Ernest potentially making millions at the expense of social benefit.
  • Jones eventually assuaged his moral concerns by making Ernest commit to donate 10% of all future profits to charity, joining forces with Meaden to take 45% of the business with an incentive for Ernest to claw back some equity if he hit his ambitious profit targets.

Start-up business lesson: Have a clearly defined and appropriate business structure in place

Dean Tempest, Tristan Hyatt-Williams and Ben Drummond (honourable mention)

Company: Linkee Ltd
Concept: Word-association quiz game
Investment sought: £50,000 for 10% equity
Investment received: None


  • The slick ad agency trio entertained the Den with a demonstration of their ‘shouty-outy’ quiz game, in which players try and guess the common link between five words revealed on a board.
  • Despite the team creating a festive atmosphere during their demonstration and revealing ‘phenomenal’ feedback from retailers and consumers, with a TV version in the pipeline, one Dragons’ previous experience in the industry was enough to put the entire room off a deal.
  • Jones revealed he had bought out a boardgame years ago (believed to be ‘Peter Jones’ Big Business) but despite its critical success it was shut out by giants within the industry and died a slow death. Jones’ conclusion that it was impossible for him to invest unnerved the other Dragons, three of which followed him in ruling themselves out.
  • Bannatyne was the last to go, but not before throwing the hopefuls a lifeline by offering them the money they wanted for a vastly inflated 40% stake, reflecting his own caution.

Start-up business lesson: If you’re operating in a crowded marketplace, ensure you have solid evidence of how you’re going to stand out


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