Dragons’ Den: Series 13, Episode 10
A disappointing week for most entrepreneurs in the Den with just one successful pitch among hair care, horror experiences and dating apps
The den was a real horror show this week with zombies crawling out of the lift and a blood curdling experience for one Leeds-based beauty salon owner which highlighted the need for business owners to have legitimate proof of how their product works.
Elsewhere love was in the air, with one lucky trio walking away with the only investment of the episode for their double dating app.
Read on for the start-up business lessons you can take away from this week’s pitches – including advice on how to woo investors with sound projections and how not to scare them off with misjudged ideas…
Company: X Grey
Concept: Product and dye which looks to prevent grey hair
Investment sought: £50,000 for 10%
Investment received: None
Claiming to have discovered the “holy-grail of hair care”, Leeds-based beauty salon owner Sajda Rasheem was first into the den with a range of products for the prevention and cover of grey hair. Bootstrapped with £40,000 of her own money, the entrepreneur explained that X Grey Prevention was the only “topical product on the market for the prevention of grey hair” and said the hair dye X Grey Chroma only needed to be applied for five minutes maximum for 100% grey hair coverage.
Despite a confident pitch, it was clear the dragons were skeptical of her signature product with cries for proof of its validity from Jones and Meaden – “It feels like somebody’s trying to sell me snake oil”. Impressive sounding science – “it mimics the apha melamonite stimulating hormone, which we already have in our body” – did little to reassure the investors with Meaden demanding to know what actual testing had been done.
While Rasheem was eventually able to produce some documentation detailing the results of a Chinese efficacy study and clinical trials, Meaden was quick to point out that “in three years nobody has bothered to mention that there is a product out there does actually stop grey hair… do you not find that slightly odd?”
This marked the beginning of the end for the entrepreneur’s pitch as Meaden then discovered the trials had been conducted on animals: “You’re doing it unethically, you’re making claims that you can’t possibly make and you’re trying to pull people into buying a product that cannot do its job… if I am wrong then I will stand up publicly and say it but I am not – I’m out”.
Willingham echoed her peer’s promise to apologise if it turned out to work, but declined to make an offer on the grounds that she didn’t “believe for a second” that it would.
Rasheem made a last ditch appeal to Jones by countering his concerns that she was “ripping off somebody else’s product” but it was to no avail and both Jones and Nick Jenkins turned down a deal that seemed “too extraordinary to be true” which left Suleyman to deliver the final blow: “You believe what you’re told but in reality you’re making all these presumptions – wake up, dreams over, I’m out.”
Start-up business lesson: If you’re peddling a “miracle cure” product, make sure you can support your claims with irrefutable results from ethical testing bodies.
Gary McDonagh, Larry Gould and Ben Greenak
Concept: Location-based dating app for double dates
Investment sought: £75,000 for 10%
Investment received:£75,000 for 15%
From a sour first encounter to a rather more romantic affair, Gary McDonagh, Larry Gould and Ben Greenak successfully vied for the affection of one dragon with their double dating app; the appropriately named Double.
Like other dating apps, location-based Double allows users to swipe through nearby singles and either like or pass but, unlike competitors, users sign up with a friend and find other pairs.
McDonagh explained that “double dates are inherently more fun due to group dynamics, there’s less chance of awkward silences and safer due to safety in numbers”.
“The only bachelor dragon” Suleyman admitted that he’d never been on an online date and didn’t understand why he’d want to share the experience with two others. McDonagh asserted that they were targeting the “third of people” who weren’t confident enough to enjoy the experience alone by mitigating the risk of “an awkward or intimidating experience”.
After the trio had successfully created some positive chemistry it was time to get down to business. They explained that the app will always be free but they’re aiming to introduce a premium model in the summer charging the user for a notification of interest of the user really likes someone. Gould further impressed the panel with the projections: from 45,000 users and a gross of £16,000 profit but a net loss of £98,000 in year one to 4.5 million users, a gross of £2.4m and a net profit of £1.3m by year three.
Jenkins, the trio’s favoured match, said he thought the founders had come up with “a very elegant way of solving the awkwardness of that first encounter” and made them an offer of all the money for 20% equity. Willingham couldn’t imagine a situation where she could go on a good double date and removed herself from proceedings, followed by Jones on the grounds of his lack of experience with online dating.
Suleyman and Meaden both matched Jenkins’ offer and Meaden also made an alternative offer of half the money for 10% if she could share with Jenkins. Mcdonagh asked if she’d be happy to come down to 7.5%, collectively 15% for the same equity share.
Meaden was reluctant, worried that if she dropped below 10% she couldn’t give them what they need, before Jenkins reveled he would be prepared to take the offer of £75,000 for 15% on his own. It was a match, with the trio saying they’d come in with a game plan and it had worked.
Start-up business lesson: Presenting sound and impressive projections for the future of your business will help encourage investors that their investment is worthwhile.
Concept: Medical alert devices
Investment sought: £75,000 for 20%
Investment received: None
Next into the den was a Bristol-based accountant who believed he had created a product which could potentially save lives of the 3.2 million people living with diabetes, 850,000 diagnosed with dementia and 600,000 living with epilepsy in the UK. Tap2Tag produces scannable, medical alert devices including wristbands which enable “first responders to get immediate access to critical life saving information” on their phones using Near Field Communication.
A confident Ford claimed to have sold nearly 700 units to date at £20 a unit with no subscription fees and would use the funding to “raise awareness of the product with both the medical profession and the public” and to “enhance the website to provide more functionality”.
Willingham was worried that in order for it to work “the paramedics have all got to know what it is”, prompting the accountant to retort that back in June of last year he’d “notified every single ambulance trust in the UK about the product and how to deal with it.”
Suleyman was first to exit the deal, raising concerns about the expensive maintenance of the website and the possibility of the product being easily undercut by a cheaper competitor. Meaden followed, citing her previous experience selling products in the NHS: “You have to have a date by which you switch on and everybody knows exactly what is there and I just think you’re a long way from that”.
Jones thought Ford was “well below the curve in terms of where the technology is going”, suggesting “he should be thinking more about fingerprint recognition which wouldn’t have to rely on an internet or phone signal”. He declined to make an offer.
At £5.60 profit per unit, Jenkins decided it was far too big a risk for a “tiny, tiny reward”, leaving Willingham to lay Ford’s dreams of investment in the den to rest. The restaurateur said she’d still go for the piece of paper in the bracelet over his device because “more people would know that that exists” and also bowed out.
Start-up business lesson: Before you commit to basing your business around a specific technology, consider other emerging technologies that may have a wider application and more staying power going forward.
Company: Ram Training
Concept: Horror experience role-play events
Investment sought: £80,000 for 20%
Investment received: None
In one of the most dramatic openings to a pitch ever seen in the den, a man in full zombie make-up came groaning out of the lift towards the dragons’ before being subdued and dragged off by two men dressed as soldiers in full riot gear.
With the dragons suitably entertained but very confused, ex-army officer Roy Fitter launched into his spiel. Described as “fast-paced, very visceral, first-person horror events”, his business Ram Training offers four different experiences: Zombie Boot Camp, The Asylum, Zombie Boot Camp After Dark and Wolfmen, in which members of the public receive military training to fend of hordes of the undead. Fitter claimed the Midlands-based horror role-play business had already seen 25,000 people take part in its events with the funding used to develop one or two new satellite sites within the UK over the next two to three years.
Suleyman admitted that he was more of a romantic sort but wanted to know what the “ideal booking would be” and what somebody would pay for it. Fitter revealed that 85% of his clients were stag groups paying an average of £78 per person with most groups consisting of 12 to 15 paying customers. This had produced a projected turnover of £284,000 for 2015, resulting in a net profit before tax of £84,000.
All seemed to be going well until Fitter revealed that the dragons would only be investing in the new venture – a more intimate scenario in a secluded farmhouse. “So you want me to take the risk of a new business while you and your son can settle up in the Bahamas?” Suleyman asked, to which Fitter had to agree: “I suppose that’s one way of putting it, yes”.
Jenkins said that “dividing his time between two very similar businesses” immediately creates a problem: “a juicy contract comes in and you think, well do I put it through Ram or do Ram Two – it creates a conflict.” For that reason, he was out.
Fitter acknowledged that he’d come in with the wrong pitch, an honesty which appealed to Meaden, but it wasn’t enough to secure investment from her. Willingham agreed, saying he’d given her a brilliant “idea for her husband’s next birthday” but that she couldn’t invest in the business in its current form. Suleyman followed, believing the army veteran had the cash and skill to go forward with the business on his own and said he would give him the chance to make more money by refusing to invest.
Jones, who had remained uncharacteristically quiet throughout the pitch, revealed that he didn’t agree with the other dragons’ view that the deal was unfair and made an offer of £80,000 for 30% of Ram Training and the new business.
Unfortunately, Fitter was unable to make the decision without consulting his family, forcing Jones to exclude himself from the deal.
Start-up business lesson: Make sure the offer that you’re pitching is the most attractive proposition to investors and not just the most attractive option for you.