Dragons’ Den: Series 11, episode 4
The notoriously hard to please Duncan Bannatyne secures his first deal of the series with franchise Yoga Bellies
Again, it was just one business that struck a deal this week; Cheryl and Michael Macdonald’s Yoga Bellies franchise received £50,000 backing from experienced franchisor Duncan Bannatyne, marking his first deal of the series. Kate Smith charmed the dragons with her portable do-it-yourself arts and craft kits but not enough to make them reach into their pockets, whilst a decidedly less charming Cumbrian woodsman turned off the dragons with his dismissive, combative attitude in a pitch Peter Jones memorably called ‘appalling’.
Cheryl and Michael Macdonald
Company: Yoga Bellies
Concept: Yoga teaching franchise for women and children
Investment sought: £50,000 for 20% equity
Investment received: £50,000 for 35% equity, dropping to 20% if targets hit (Duncan Bannatyne)
Cheryl and Michael Macdonald claimed to be empowering women all over the world with their yoga franchise targeted at mothers and children, which allowed licensed teachers to make money around flexible schedules. Inviting a pregnant franchisee into the Den for a demonstration of a typical class, the husband-and-wife team also revealed a solid set of figures that showed the business on target for £50,000 profit this year, which they claimed would rise to £200,000 in year three. The Dragons were further impressed when the Macdonalds admitted that Yoga Bellies had been entirely self-funded up to this point, with a healthy £40,000 in the bank.
The Dragons were impressed by the pitch, and the pair acquitted themselves well in the rigorous questioning that followed. Jones’ concern that their franchisee numbers would drop following a hike in fees was countered by Bannatyne; having made his fortune with his own luxury spa franchise, his experience was that raising fees had the effect of weeding out all but the most committed of franchisors, leaving the business healthier as a result. Hoppen and Meaden, silent spectators for most of the pitch, ruled themselves out of a deal despite being impressed with the business, saying they could not dedicate enough time to scaling a franchise that was already operating internationally. Jones and Linney were also out after being unconvinced by Yoga Bellies’ potential – but in truth this pitch was always tailor-made for an investment from franchise king Bannatyne. The impressive pair concluded a deal with the Scot but not before employing some brave bargaining tactics, convincing the investor to reduce his 35% stake to what they were originally planning to give away if the company met its financial targets.
Start-up business lesson: Don’t be afraid to negotiate, if you don’t ask, you won’t get
Kate and Nigel Smith (honourable mention)
Company: The Makery
Concept: Portable make-it-yourself arts and crafts kits
Investment sought: £50,000 for 10%
Investment received: None
- The married pair won the Dragons’ hearts with their charmingly designed homespun arts and crafts kits, which mirrored the personality of the unassuming and likeable Kate.
- Unfortunately for the duo, charm can only get you so far; the ad-hoc nature of the craft kits extended to the entrepreneurs’ shaky grasp of their own financials, and when they finally did get a grip on the figures their valuation of the Makery was revealed to be wildly optimistic, amounting to 25 times their current profit.
- Jones spoke for the rest of the Dragons when he exclaimed experiencing the pitch was like ‘living in Narnia’ – the casual way the business was run made it unsuitable for a serious investor. All five ruled themselves out but not before wishing the affable pair good luck.
Start-up business lesson: If you’re looking for serious investment, you need to pitch your business as a serious contender in its marketplace, however ‘light’ the products
Richard Bowness and Steve Tonkin (honourable mention)
Company: Truncator Multi-Cut Saw Horse
Concept: A stabiliser for cutting multiple logs
Investment sought: £125,000 for 30% equity
Investment received: None
- Cantankerous woodsman Bowness may have picked up the dubious honour of the worst Den performance ever with his pitch, which included the kamikaze tactic of personally admonishing the Dragons.
- After being confronted with a tough, but fair, question about the size of the potential market for his multi-log saw cutter, Bowness launched into a furious rant at the Dragons, telling Jones he ‘didn’t know what he was talking about’ and commending the ‘pluck’ of the investors for daring to challenge him.
- If Bowness thought this speech would humble the Dragons into making a generous offer, he was mistaken. Bannatyne, visibly livid, was the first out, followed by the others who agreed with Jones that whatever the merits of the product, the pitch was simply ‘appalling’.
Start-up business lesson: No business is too big for common courtesy, if you’re looking for money, it’s always best to ask nicely