Dragons’ Den: Series 13, Episode 12

There was no "yolk-ing" around for an egg company this week while three start-ups walked away with investment. Read the business lessons here...

It was a rare episode of Dragons’ Den this week as three of the four start-ups which pitched on the show received dragon backing, while a hard-boiled egg business failed to crack an offer of investment.

With pitches for start-ups in the beauty, recycling and energy markets, we’ve summarised each of the presentations and the key business lessons you can take-away from the latest installment of the show.

Read on to find out more…

Lloyd Hazel and Tasha Harris

Company: Grounded Body Scrub
Concept: Coffee-based body scrub range
Investment sought:£30,000 in exchange for 15% equity
Investment received: £30,000 for 45% equity (Sarah Willingham)

Having only been in business for a couple of months, partners Lloyd Hazel and Tasha Harris were looking for investment for their coffee-based body scrub start-up Grounded Body Scrub. Made from freshly-grounded Robusta coffee seeds with no animal testing, the duo explained that the scrub could effectively target cellulite, stretch marks, varicose veins, eczema, acne,  scarring and more.

While Hazel appeared more Danny Dyer than Richard Branson in his pitching approach, the retail entrepreneur provided a convincing case to the investor panel explaining that the business had achieved £10,000 turnover in its first month with sales via its website and on Nothonthehighstreet.com, and also had offers of interest from Urban Outfitters in America.

Meaden opened up questioning as she wanted to find out more about the product’s health claims. Harris said the the scrub helped “perk up skin and improved circulation” but Jenkins appeared  unconvinced by the medicinal claims of the scrub as the duo weren’t doctors or medically trained and didn’t have enough evidence to back it up. Jones was more unconvinced by Hazel as an entrepreneur: “I get the impression that you’re a bit all over the place and imagine that you’re like that in life as well”.

Suleyman was the first investor to announce himself out of the deal: “I think you’ve done a great job in such a small space of time but I think you’re about six months too early. It’s too small and for that reason I’m out”. Meaden followed suit as she struggled to get a sense of business experience from the founders: “There is something about you but it’s very early-stage and you’re going to need a lot of investment. I’m not going to make you an offer.”

Hazel then seemed to blow his chances in the Den when he inadvertently stated “I don’t want to do anything, I want someone to do it for me” which Jones took offence to: “You two are going to need an intense amount of work, I think you are too early-stage, you’re going to need someone on the end of the phone constantly, it’s not for me”.

Jenkins also felt the duo requited too much work to get the business off the ground; “This could be a good lifestyle business but […] it’s going to take too much work to turn this into a good return for an investor”.

While it seemed Harris and Hazel’s investment dreams had been scuppered, Willingham then revealed she saw the market potential and wanted to back the company but was concerned about the amount of help they would need. She made a “ballsy” offer of the full £30,000 for 45% equity which the duo quickly accepted.

Willingham explained her investment decision: “I think there is room for coffee scrub in the UK as more and more people learn about the benefits.”

Start-up business lesson: While business experience is essential for any start-up entrepreneur, dragon investor Willingham was able to look past Hazel and Harris’ lack of expertise because of their product’s market potential. A great product has the ability to create new markets and stretch the imagination, as Grounded Body Scrub successfully demonstrated. Check out our guide on developing a winning product business here.

Peter Ancketill

Company: Glassbusters
Concept: Glass compaction, collecting and recycling company
Investment sought: £200,000 for 10%
Investment received: £200,000 for 30%

Next up to pitch was Peter Ancketill who had invented a device to help pubs and restaurants with waste recycling. Ancketill explained that his company, Glassbusters, specialises in glass bottle compaction, collection and recycling and manufactures machines which can be installed into bar tops and restaurant counters to save businesses time and money when recycling bottles.

Willingham, who made her money from bars and restaurants, was first to share her view on the business proposition and felt that the “market would be limited” and couldn’t see a use for the product in her industry. Having previously invested in the recycling industry on the Den, Meaden was also doubtful over the business’ potential:”It’s a very tough industry because there are some big players.”

Ancketill then shared the business’ revenue figures and projections – turnover of £156,000 for 2014 with zero profit – which attracted criticism from Jones and saw him bin the deal; “It seems ridiculous to me that you’ve valued a company at £2m.  I don’t want to invest today at tomorrow’s price. You’ve killed it before you started with the valuation, I’m out.”

Suleyman also bowed out of investing after the recycling entrepreneur failed to provide direct responses to his questions: “A lot of this doesn’t make sense. There’s [speculation] to the future and your valuation is too much, I’m out.” And Meaden then showed her cards: “The model you’ve got won’t work. I would concentrate on doing deals with the waste management companies, focus on that and your life will be better. I won’t be investing, I’m out”.

Anckertill refuted Meaden’s feedback which led Willingham to turn away from investing as felt she couldn’t work with him on a personal level: “I’m sorry to say that but I feel like you’re not being straight with us. I just can’t invest it, I’m out.”

Jenkins was the final entrepreneur to share his feedback and, in a surprise turn of events, the Moonpig founder made an offer of the full £200,000 for 30% of the business as he thought it was a “great invention” and told Ancketill; “I think you’ve got something”.

With little hesitation, Ancketill accepted Jenkins’ offer and, on exiting the Den, said he would have been willing to give away more equity “but don’t tell Jenkins that!”

Start-up business lesson: Starting a business requires bottle. Although four of the dragons felt Glassbusters was a non-viable business, Jenkins saw past the founders’ lack of clarity in his responses as he felt “there was something there” in his glass recycling invention. To ensure that you get investors on side, learn from Ancketill’s pitch and make sure you give clear and reasoned answers to any questions investors may ask of you. 

Rob Shaw

Company: Crackin’ Egg Company
Concept: Ready-to-eat hard boiled eggs
Investment sought: £80,000 for 20%
Investment received: None

In an unusual pitch, poultry farmer Rob Shaw entered the dragons’ lair with his chicken Pepper as he explained that he was looking to crack the savoury snack food market with an innovative twist on the “humble hard boiled egg”.

His business, the Crackin’ Egg Company, specialises in ready-to-eat hard boiled eggs painted in various colours to “keep the good stuff in”. Priced at £1.59, the start-up gave the dragon investors food for thought as Shaw revealed he had invested £100,000 into the business.

Meaden immediately raised concerns with the appearance of the egg and didn’t like the natural colouring that came off onto the egg once the painted shell was peeled off. Shaw responded that the “painting was crucial as it re-seals the shell and preserves the egg, it’s more about shelf life”.

The product’s price point proved more of an issue for Jones as he argued: “Why would I pay five times as much to have a coloured-outside egg than one I have at home?” to which Shaw responded; “In Germany, there were over one and half million sales of hard-boiled eggs of this type last year”, hinting at a potential market in the UK.

However Shaw began to crack under pressure when Jones inquired about the company’s German competitor Egger. Shaw quickly revealed he knew very little other details about the competitor such as revenue figures, RRP etc. and Jones wasn’t convinced; “So you know nothing about the market? You crack me up. This really isn’t a business and you don’t have substance to sell me [this]. I’m out”.

The company’s revenue figures (£160,000 sales and loss of £174,000) then set alarm bells ringing for Suleyman who announced he wouldn’t be investing; “Cash is king, you can have the best business in the world but if you can’t pay your bills then you’re broke. I think you’re going to run out of money so I’m out.”

Willingham was more concerned with the product itself: “You’re taking away the magic as it’s a fresh product. I’m out” and Meaden agreed; “If only you can make it look like an egg, it looks plastic. I’m out”.

Jenkins then put an end to the Crackin’ Egg Company’s time in the den as he stated that while he could see a market “the business is in the distribution side and that’s the bit you don’t have so it’s not for me.”

Start-up business lesson: Shaw’s pitch came under fire as he hadn’t researched the market thoroughly, the product’s appearance was deemed off-putting, and there were major fears around a cash flow crisis. All points to watch out for when looking for investment. 

Spencer Turner

Company: Tegstove
Concept: Tech-enabled camping stove
Investment sought: £45,000 for 25% share
Investment received: £45,000 for 25% (Peter Jones)

Concluding the episode was Spencer Turner, the founder of cost-effective camping stove Tegstove which cooks food while charging any device – including a phone and camera – that has a standard USB connection.

In a nervous pitch, Spencer revealed that he planned to retail the product at £140 and was looking to target the camping, fishing and festival industries having already received letters of intent from brands such as GoOutdoors. After presenting a practical demonstration of the Tegstove, Turner explained the heat from the stove transfers to a thermo-electric generator which creates an electrical current to charge devices.

Meaden wanted to know how the Tegstove stacked up against competitors and Turner gave a good response which showed he had researched the market. Turner explained that the main competitor was the “BioLight which retails at around £100-£120 but has a fire chamber so it uses sticks rather than gas. […] It’s a good product but a lot of camping sites don’t allow wood fires.”

Meaden was immediately impressed and fired up an offer; “I’ve got to tell you that I like it. It’s something I want to get involved in, you have come in with a good product and I’m going to make you an offer of £45,000 for 25%”. Willingham praised the product too but felt her lack of expertise in the industry “wouldn’t do it justice” so declined to invest.

Jones was equally as impressed and announced he would be making two offers; one for all of the money for 25%, or the full £45,000 for 30% split between himself and Meaden. The pitch turned on its head as Meaden and Jones attempted to woo Turner to accept their offers, sparking a bidding war.

Jenkins soon announced that he wouldn’t be investing as has wan’t going to compete with Meaden, and Suleyman then followed up with an offer of £60,000 for 25%; more than the entrepreneur was looking for. Suleyman attempted to attract Turner with the promise that he would fly with him to China to meet distributors “which I don’t think the other dragons here would. […] I would offer more than just the odd phone call”. This comment sparked a reaction from Meaden who stated: “None of my investments get just an odd phone call here and there!”

Turner quickly rejected Suleyman’s offer in favour of the combined investment offer from Jones and Meaden but Meaden then revealed that she wanted “to be greedy” and didn’t want to invest alonside Jones. This decision went in Jones’ favour as Turner opted to take the £45,000 investment from Jones, instead of Meaden.

On securing backing from Jones, Turner commented: “I’m really excited, it’s more than I can hope for”.

Start-up business lesson: Despite his nervous delivery, Turner wowed the dragon panel by pitching an innovative product with a clearly-defined USP. Turner’s pitch – which received three offers of investment – demonstrates that the product or service you offer to investors needs to be unique and you need to prove that it can stand out from competitors.

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