Dragons’ Den: Series 13, Episode 7
This week's episode saw pitches from a woman on a 'vegetable revolution', a mad scientist, and an entrepreneurial duo having a "bad hair day"...
Mad science, bad hair days and vegetables in disguise-the latest episode of the Den was definitely one of the wackiest in the series so far and was also witness to a rarely seen moment; three offers matching an entrepreneur's request.
There were also several lessons to be taken from this week's pitches as a founder stumbled over her business' USP and two entrepreneurs were turned away for not being ambitious enough nor having “done their homework”.
Read on for a recap of the latest episode and the key takeaway points to help you win over investors…
Company: Blue Badge Company
Concept: Living aid accessories
Investment sought: £70,000 for 7% equity
Investment received: None
Prior to even pitching the Dragons, budding retail entrepreneur Ellen Green made it apparent that she was looking to win backing from Touker Suleyman on the grounds that she and the fashion mogul had “clear synergies”. Green did go on to secure an offer from Suleyman but ultimately walked away empty-handed…
A ‘Made in Britain' business, Green explained that the Blue Badge Company manufactures and retails “attractive living aids” with its main focus being disabled badge holder wallets. Having made over 80,00 wallets and agreed deals with Boots, Halfords and a range of Post Offices, the Dragons were initially impressed. Even more so when Green outlined her social ethos and explained that 40% of her workforce are either disabled or primary care givers.
Green was asked to justify her £1m business valuation and explained that her latest year accounts were £221,000 turnover and gross profit of £86,000 with projected turnover of £800,000 and £357,000 gross profit. These figures appeared to put Jenkins' mind at ease; “You're very good on numbers, I like that” and the Moonpig founder made Green an offer of half of the money for 15%.
Suleyman then shared his thoughts on the business and explained that he was on the fence; “Your product is quite safe, I think it's quite boring but I think I can help you in making your product more appealing”.
Willingham was less undecided and declared herself out of investing as she felt the living aid market was “too niche”. Jones shared Willingham's thoughts and also criticised the valuation – “a valuation at four times your current income isn't right, I think you've really over valued what your business today is worth so I'm out”. Meaden was also wary of the valuation but was confident in Green's business acumen – “you're great and on the ball” – and made an offer of the full £70,000 for 25%.
Suleyman then came in with an offer for the full £70,000 but for 40% as he felt he “could offer more than all off the other Dragons” and waned to offshore some of the production to grow the business. An attempt at negotiation by Green saw Suleyman come down to 35% with the request that Jenkins come in with him at 17.5%.
Yet this discussion between Suleyman and Green started alarm bells ringing for Jenkins who couldn't understand Green's preference for Suleyman; “You've got a ‘Made in the UK' business, that's what you're all about, and you want a Dragon that specialises in offshoring and has made a career out of moving everything offshore! I'm sorry but I'm out”. Meaden was equally alarmed and also declared herself out of investing.
From three offers to just one from the Dragon she initially wanted, a “shellshocked” Green decided to decline Suleyman's offer as the equity was too high and she said she didn't want to compromise the business' Made in Britain proposition.
Start-up business lesson: Stick to your business values and don't compromise on your USP. Investors will want to see that you have a clear vision for your company so you shouldn't undermine what you have to offer.
Adam Symons and Tarik Fatihi
Concept: Online hairdresser booking service
Investment sought: £80,000 for 5%
Investment received: None
Next to enter the Den were Adam Symons and Tarik Fatihi who were looking for investment for their on-demand hairdressing service HAIRCVT. In a well-groomed pitch, Symons and Fatihi explained that their site enabled users to find and book a qualified hairdresser online with a 15% commission charged on any booking made. Having signed up over 150 salons and secured partnerships with leading hair product companies such as Revlon and LOREAL, would the Dragons want a cut of the business?
From the get-go, Suleyman made it clear that the business proposition wasn't for him; “You're assuming that people aren't happy with their current hairdressers and [will come to you but] hairdressers and clients have a very personal relationship”. Fatihi responded that they had launched business because they “knew people were looking to change hairdressers” but, on further questioning from Suleyman, revealed he had no market research or data to back up this claim.
Willingham then questioned the company's booking software and said it was “flawed” as customers couldn't make live online bookings although the duo asserted that “owning live booking data” was their aim.
But it was the company's financials which led to the pitch coming undone as Symons explained that they were going to lose money for three years as they wanted to “grow their business”.
On the back of this revelation, Jones announced that he wouldn't be investing: “You're going to burn an amazing amount of capital before you get to your goal so I'm out”, followed by Suleyman-“this is not for me, I don't think you've done your homework properly” and Jenkins;”the chances of you succeeding are slim”. Willingham similarly declined to invest as she felt they were going to need “too much time and money to make it work”.
Concluding HAIRCVT's time in the Den, Meaden revealed that she did like the business but felt she couldn't invest as the founders weren't ambitious enough. She explained: “If you really want to own this, you need millions but that doesn’t scare me at all because I think that’s what it’s going to take but I’m not sure you’ve got the big piece that I wanted to hear – you didn’t sell me the vision”.
Start-up business lesson: Selling your business to investors requires you to have a full handle on your market, therefore data and relevant survey statistics are a must. You should also have clear long-term goals that will encourage investors to buy into your vision.
Company: Secret Sausages
Concept: Vegetable sausages made with no meat or meat substitutes
Investment sought: £50,000 for 15%
Investment received: None
It's a well known fact that children aren't always keen to eat their vegetables, so on this basis Rachel Wicklow decided to create Secret Sausages – “vegetables in disguise” – which are made to look like normal sausages without meat or meat substitutes.
Intended to bring about a “vegetable revolution”, Wicklow detailed a number of stockists including Ocado, Holland & Barret and Wholefoods and said she wanted Dragon backing to take her sausage alternatives nationally and internationally.
Jenkins was first to question the entrepreneurial mum and said he believed the market was dwindling with the number of vegetarians decreasing but Wicchow stood her ground and came back with a range of figures from Mintel which showed that the market was, in fact, buoyant.
Despite solid market research, it was the company branding and proposition which attracted the most criticism from the Dragon panel. Willingham felt that Wicklow was on a “veggie smuggling crusade” and said she didn't “believe in vegetables being smuggled into food” and Suleyman and Jenkins were equally as unconvinced.
Jones' query was with the naming of ‘sausage' – “it shouldn't have been called a sausage, it isn't a sausage! And there's nothing secret about it”. With Jones having exited the deal, it was left to Wicklow to cook up a deal with Meaden but to no avail.
Meaden: “I love this space, I love what you’re doing and I really want to encourage people but I don’t think the taste is very nice and I don’t like the texture. I can’t invest in something I don’t like the taste of.”
Start-up business lesson: Branding and messaging is essential to winning investment, the Dragons felt that Wicklow was promoting the wrong message that vegetables should be hidden into food which saw her leave the Den without funding.
Company: Sublime Science
Concept: “Fun” children's science parties, workshops, stage shows
Investment sought: £50,000 for 10% equity
Investment received: £50,000 for 20% equity (Willingham and Jenkins)
Last in the Den and this week's only successful investment was for scientist Marc Wileman or ‘Mad Marc'. Wileman is the founder of Sublime Science; a business which makes science “awesome” for primary school-age children across the country with science parties, workshops, shows and more.
Started “with humble beginnings”, Wileman said the business had become one of the most in-demand kids parties and had engaged over 280,000 kids with a goal to inspire one million kids nationwide. The science entrepreneur had also launched a series of books which sought to make “science fun for kids”.
Yet it was Wileman's solid financial figures, £533,000 turnover (2014), £177,000 net profit (2014) and projections of £750,000 turnover (2015) and £250,000 net (2015), that created a catalyst of offers from the Dragons and shocked Jones; “congratulations, I really wasn't expecting figures like this”.
Although Suleyman negated to invest as he had “no interest in science”, the remaining Dragons were all keen to take a share of Wileman's business and, in a rarely seen moment in the Den, made offers matching Wileman's request:
- Jenkins: “I think I can add something here and I really like it so I’m going to make you an offer of all of the money for 10%”.
- Willingham: “I like that it started with good intentions and has turned into something really good. I spent many years in international franchising so I’m also going to make you an offer – £50,000 for 10%.”
- Meaden: “I can see this working well on the holiday and travel market so I’m going to make you an offer – all of the money for 10%. Please let it be me! I’m excited as I can see what we can do.”
Jones, on the other hand, felt he could spark more growth for the business and made an offer of all of the money for 20%; “I own a chain of convenience stories and I own Red Letter Days so [that's two routes to market] I want more equity”.
With a positive reaction from all of the investors, it was left to Jenkins and Willingham to pitch themselves to Wileman and they suggested a joint offer of 10% each to have both of them involved in the business.
After weighing up each offer, Wileman chose to go with Jenkins and Willingham as he felt the “enthusiasm and passion was there”. Great chemistry indeed!
Start-up business lesson: Wileman had the Dragons' eating out of his hands-largely due to having a solid track record, good financials, and a solid understanding of where he wanted the business to be and how he planned to get it there. While you might not be able to present a business with six-figure profits, evidence of growth and an ambitious strategy will help attract investor attention.