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Dragons’ Den: Series 13, episode 2

An investment-heavy episode with two appetising pitches from budding food businesses and backing for a board game company which got past 'go'

It was a battle between Dragons old and new in this latest episode of the Den as Peter Jones and Deborah Meaden secured deals over offers from Sarah Willingham, Nick Jenkins and Touker Suleyman.

The episode also showcased some great UK product innovations with pitches from two up-and-coming food companies and a board game business on a mission to become a global success.

With three Dragon investments in total, we take a look at the business proposals which successfully secured funding and offer up advice to help you win over investors…

Chika Russell

Company: Chika’s
West-African inspired snacks
Investment sought: 
£30,000 for 5% equity
Investment received: 
£30,000 for 25% equity (Jones)

In a pitch that wowed all five Dragons, Chika Russell entered the Den with an entourage of West African dancers asking for investment to grow her food range offering a “taste of the exotic”.

Russell explained that the range, which included hand toasted peanuts and plantain crisps, was already stocked in 150 outlets across the UK since launch in February 2014 and said advanced discussions were underway with Waitrose for 130 stores.

Willingham was the first to express interest in Chika's stating; “I really love your product, I think there's a massive market for African food in the UK.” This interest peaked further when Russell outlined plans to extend the range to dry marinades and sweet potato crisps.

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Suleyman was also taken by the product and wanted to know more about Russell's export plans as he believed Russell could grow the business by selling the products back to Nigeria and Ghana – feedback which Russell accepted.

Enthusiasm for Chika's products also extended to Jenkins who was the first to make an offer – bidding £30,000 for 10% equity. Jenkins' proposal was then followed by an offer of £30,000 for 20% from Meaden who felt Russell was “extremely capable”.

Next up was Willingham who wanted “to go on the journey” with Russell and made an offer of £30,000 for 20%, followed by Jones who offered to give Russell £30,00 for 25% using his experience of building the Levi Roots brand as evidence of how he could make Chika's into a successful brand. Suleyman made it a full house with his dramatic offer of £40,000 and a £30,000 credit facility “to help you grow, I think we can make a great team”.

With five deals on the table, Russell was left to negotiate and made the Dragons wait it out, a process which Jones dubbed “frustrating”. Yet Jones' frustration didn't last long as Russell announced she would accept Jones' offer.

On Russell's exit from the Den, Meaden asserted: “I’ve never seem someone come in and hold their ground like that. At one point she had all of five of us pitching to her.”

Start-up business lesson: When taking a product business to investors, evidence of interest from retailers, growth projections and a high quality product are essential not just nice-to-haves. There's also a lesson to be learnt in that Russell accepted an offer from Jones while giving away five times more equity than she had originally planned – the value of an investor can be worth as much as the investment.

Graham and Fiona Fraser-Bell

Company: Accentuate Games Ltd
A “guess-the-accent” board game
Investment sought: 
£45,000 for 15% equity
Investment received: 
£45,000 for 40% equity with a ratchet to 25% (Jones)

With board games such as Linkee having failed to win investment from the Den in the past, brother and sister duo Graham and Fiona Fraser-Bell were looking to create a shift change with their award-winning ‘guess-the-accent” board game business Accentuate.

Having made £57,000 sales for 2014 and revenue projections of £200,000 for 2015, the Fraser-Bells explained that they were looking to launch a US version of the game and wanted support from the Dragons to scale the business globally.

The pitch got off to an awkward exchange with Jones telling Graham Fraser-Bell that he had lost £5m in “poor investments” and Jones said he felt the game was “just far too simple”. Jenkins agreed with Jones and suggested that the game would be improved it if used different languages. Adding “I don't think you need my money”, Jenkins then declared himself out of investing.

Willingham also negated to invest because, having played the game and failed to deliver a Scottish accent, she said “there's no way I could invest in something that I'm so bad at!” but felt the couple were “highly backable”. Meaden was equally unwilling to invest on the grounds that “intrinsically I don't like games”.

Tuleyman then made a “punt” offering half the money for 15% equity but it looked unlikely that Jones would invest given his earlier comments. However, Jones, having been swayed by Jenkins' suggestion of a language addition, decided to make the couple an offer of £45,000 for 40% equity on the basis that he would be the sole investor.

Having negotiated a ratchet deal of the equity moving down to 25% once the duo had paid the £45,000 back to Jones, the Fraser-Bell's left the Den £45,000 better off. Game on.

Start-up business lesson: While their business came under criticism, the Fraser-Bells won investment for being “highly backable” and “credible” and demonstrated a professional work ethic with no plans to take a salary until they had grown the business. In most cases, investors look to back the individual(s) as much as the business so remember this when pitching.

Linus Gorpe

Company: Raw Chocolate Company
Manufacturers and retails raw chocolate bars, covered berries and raw superfoods
Investment sought:
£72,000 for 5% equity
Investment received: 
£72,000 for 10% equity (Meaden)

The final investment in the Den was achieved by the Raw Chocolate Company, founded by the eccentric Linus Gorpe who wanted finance to scale his superfood company which uses unrefined sugars “which won't raise blood pressure levels”.

Gorpe's pitch went smoothly from the get go as he explained how his products were already sold in independent health stores across the UK and that he had previously had Holland & Barrett “knocking on his door”.

Praised by Jones as the “best chocolate that has come into the Den”, Gorpe's business offering gauged the attention of Willingham and Suleyman who were keen to know where Gorpe sourced everything from. Gorpe explained that he bought the ingredients from a UK importer who bought them from Peru, Suleyman said that he would want to help Gorpe “cut out the middle man and go directly”.

When it came to investing though, Willingham made a surprise exit; “I’m not the best person to invest in this to get you into the mainstream supermarkets” while Meaden was the first Dragon to make an offer – bidding £72,000 for 10%.

Jenkins also wanted in; “I love the product and what you’re doing. I wouldn’t want to invest in all of it but would happily tag along with some of the other Dragons” offering £36,000 for 4% of the business. It quickly became a bidding war as Suleyman matched Jenkins offer, albeit at a higher equity stake of £36,000 for 6% as he felt his background in sourcing, manufacturing and distribution meant he had more “Touker time” to offer.

Jones then pitched in and, while concerned that he was “up against it” made an offer higher than the investment amount of £90,000 for 20% which Sulelyman then bettered; “I'll give you £100,00 for 20%!”.

Despite the offer of more investment, Gorpe's decision appeared to come down to equity stake as he concluded that he would accept the 10% offer from Meaden.

Start-up business lesson: You should also be cautious when giving away equity and consider your options, Linus felt Meaden's lower option was the best offer but you need to look at the value of the deal and the contacts the investor has to offer.


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