Dragons’ Den: Series 14, Episode 10
Take a look at the business lessons from this week's pitches, featuring igloo discos, veggie hot dogs and poop scoops...
Just one start-up walked away with investment in the Den this week after giving way more than three times its original equity offer to Peter Jones – a deal which, according to Jones, has since collapsed due to issues around due diligence.
Elsewhere, an Igloo marquee hire company left the Dragons cold and a device to help dog owners pick up their pets’ waste saw the panel turn their noses up.
Read on to find out where the entrepreneurs went wrong, and right, in their pitches and learn from their mistakes…
Company: Igloo Disco
Concept: Alternative marquee hire
Investment sought: £80,000 for 20% equity
Investment received: None
The Den’s first hopeful this week was Leeds-based entrepreneur Danny Savage: “When I was younger my head teacher always said ‘you’re either going to end up a millionaire or you’re going to end up in jail’.”
Watched from the wings by his dad and sales manager, Savage opened his pitch with a demonstration of his product – an inflatable igloo with a DJ, disco lights and a smoke machine.
Igloo Disco is an ‘alternative marquee hire’ company which provides inflatable igloos of varying sizes for events, from festivals to 18th birthdays, nationwide.
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A club promoter, DJ and event manager, Savage asked the Dragons to close their eyes and remember their most memorable party experience, explaining that his was playing to 2,000 revelers from an ice cream van at Glastonbury. Savage said that it was this moment that made him sure that “creating amazing party experiences” was what he was born to do.
The entrepreneur claimed that the UK’s 18th birthday market is worth £750m and currently accounts for 25% of Igloo Disco’s bookings. The business’ first year turnover was £80,000, netting a profit of £31,000. Year two: £208,000, with profits of £3,000.
While Savage admitted that there were three other companies doing a similar thing, he explained that it was the event planning arm of the business that set it apart: “One of our main selling points is the whole package we provide. It’s like a pop-up nightclub for your back garden”.
Deborah Meaden was impressed by his prices: “That’s good value, £3,295. Much lower cost that your average marquee”. Willingham was next to fire questions at the entrepreneur and wanted to know hwo people found the business. His answer was the following:
“We’ve got about 20,000 Facebook followers, we advertise in various different places, Google Ads, Instagram ads, we’re everywhere”, He claimed that an advertising spend of £1,500 a month resulted in around £25,000 in turnover. However, Willingham didn’t understand why he didn’t spend more money on advertising: “I mean there’s your million pound turnover right there”.
Like Willingham, Jones didn’t seem impressed: “What have you got that’s different to the hundreds of event companies out there?”
Savage: “You’ve got my knowledge of the events industry: I’ve been a consumer, a booker in the venues, a DJ, a festival organiser, I’ve been on every angle of this business. We’ve been doing it two years now and no one’s stepped into the market and succeeded”. Jones: “With respect Danny you could argue that you haven’t succeeded”.
Touker Suleyman was more concerned with company cash flow. Suleyman questioned why, if Savage had 30 events booked, he wasn’t using the deposits to keep on top of cash flow: “I’m just concerned that a business that should be cash positive isn’t”.
Jones became the first investor to drop out: “I think it’s quite a small opportunity, but as a business I think you’ll do very well on your own”. Meaden followed, citing similar concerns, and while Nick Jenkins loved the concept, he decided there was too much potential for contenders to swamp the market.
The busienss was too niche for Suleyman and Willingham didn’t think the market was big enough to represent a significant investment opportunity, calling time on Savage’s party.
Start-up business lesson: The Dragons loved the concept of Igloo Disco, but couldn’t see it transitioning from concept to a profitable, million-pound business and there were concerns about competitors. Cash flo, in particular, was one of the main concerns for the investors. For advice on managing cashflow, click here.
Jane Yates and Katie McDermott
Company: Not Dogs
Concept: Vegetarian fast food
Investment sought: £75,000 for 15% equity
Investment received: None
Next to face the Dragons were best friends and business partners Jane Yates and Katie McDermott with their meat-free, fast food company Not Dogs.
The pair were attempting to capitalise on the £785m a year meat-free market and claims that a growing 40% of the UK’s population are “reducers, vegetarians and vegans”, by improving the “commercial choice” of meat-free food for consumers.
In its 18 months of trading, Yates and McDermott revealed had toured events nationwide serving up 10,000 ‘Not Dogs’ with average turnover of £2,000 per day. The pair also boasted a “tribe of fans” online and revealed they’ve been invited to Downing Street as one of the UK’s ‘Food Stars’.
With plans to launch the UK’s first “meat-free fast casual restaurant” currently underway and an exclusive relationship with the “world’s most successful meat-free company” Quorn secured, the pair were looking for £75,000 for 15% equity share.
Jenkins was skeptical about the duo’s claim of there being 28 million “veggies or meat reducers” and was also worried that, with only 12% of the population actually identifying as vegetarian, the concept of Not Dogs was “actually excluding 88% of the population”.
Meaden said the product tasted good and wanted to understand the entrepreneurs’ credentials. Having worked for 18 months together non-stop in their “little purple truck” for 18 hours a day, it was clear the pair had a strong relationship, a good work ethic and understood their market.
Willingham was impressed, but was concerned that the location of Not Dog’s first restaurant in Birmingham’s Bullring was outside the food hall: “That’s actually a problem for your offering. You need to be surrounded by other food offers”.
Suleyman thought the pair were “fantastic”, but couldn’t see how he could add value to the business and became the first to exit the deal. Jenkins was next: “I can see why it works in festivals […], I just don’t see it working as a standalone place”. Jones, as a meat eater, couldn’t get passionate about the business and followed suit.
Restaurant entrepreneur Willingham also declined to invest: “I do like the specificness of it but you’re too niche […] I think it’s too high risk, I’m out”.
Finally it was Meaden’s turn: “I like the idea, I like the people, but I don’t like the business”.
Start-up business lesson: While Not Dogs was too niche to be investable, Yates and McDermott won the Dragons’ praises with their likeability and concept – which can go a long way to helping you make a successful pitch. Find out how to start a food business like Not Dogs here.
Concept: Grabbing aids for dog poo
Investment sought: £45,000 for 15%
Investment received: None
The next aspiring entrepreneur to enter the Den was John Nickels, with a device that he claimed was “the best poop-scoop in the world”.
His two products help dog owners collect pet poo when out and about. The extendable arms have a bag on the end, which closes when the trigger is pulled, sealing in the waste and smell. Nickels revealed that had had even developed a design that could fit on to a walking stick so elderly people could also use the HandiScoop.
Dog owner Jenkins could accept that not a lot of people appreciated the “warm and squidgy feeling” of picking up dog poo, but said that most dog owners “get over it fairly quickly”. Another big disadvantage of poop scoops, Jenkins highlighted, was that “you don’t have to walk around with a big thing that says: ‘I’m carrying poop’.”
As Nickels defensively battled Jenkins claims, Meaden asked him to take a deep breath: “You’ve now moved into argument mode […] and what you actually want to do is pitch for an investment”.
Nickels went on to explain that the patented design was developed in conjunction with the Helping Hand company, which develops grabbing aids. This company owns the patent and not Nickels, though he had an exclusive license to sell the product. However, he was also unable to recall how many units he’d have to sell to retain the license, uncertainly estimating it to be 5,000 pieces a year. Meaden wasn’t happy: “This agreement is something that should be in your head”.
Jones was equally unimpressed and became the first to take himself out of investing: “You’ve really just come in and tried to wing an investment […] I don’t need you, I may as well go and do a deal with the actual owner who has the ownership of the IP”.
One by one, the dragons followed Jones’ suit with Suleyman last to turn his nose up: “I would have thought by now, you’ve been going five years, you would have sold a lot more […] There’s a lot of barriers that you’ve put up today. The products right but you’re uninvestable. I’m out”.
Start-up business lesson: Nickels was combative and nervous from the off. Suleyman even admitted that the product showed potential and it was the entrepreneur that let the pitch down – an example of why it is so important to sell yourself as well as your business.
Pitching can be a nerve racking experience learn how to nail a funding pitch first time with these tips from international speaker and host David McQueen.
Vincenz Klemt and Raj Sark
Concept: Bluetooth tracking device
Investment sought: £100,000 for 8% equity
Investment received: £100,000 for 30% equity
The Den’s final entrants believed there was profit to be found in loss.
With the average person spending 10 minutes a day looking for missing items such as keys or phones, Vincenz Klemt and Raj Sark have created a Bluetooth finder and tracker which helps you keep track of essential items through its app.
Using the LUPO app, users can ‘call’ items they can’t find to make them ring out loud. The two-way device also enables you to call your phone from your keys and view an item’s last location on a map. The product retails at £20 a unit, costing £3.50 to produce.
Willingham wasn’t convinced that LUPO was the best solution to the problem; “Why not just ask a friend or family member to ring your phone?” Their only answer: “What if your partner is not there?”
Jones shared Willingham’s concerns: “Tech tracking is so old, I sell at least five or six types of tech tracking device”. Meaden claimed her sister had bought her husband something very similar for Christmas: “You’re not claiming this is unique – so why you?”
The pair said that when compared to their biggest competitor, the battery of their device lasted longer. However, this mention of a competitor troubled Suleyman: “You honestly believe that they’re going to sit there and do nothing to improve their product? […] I don’t think so”.
Jenkins agreed: “There’s going to be a lot of big companies coming in throwing money at research […] it’s too much of a gamble”. He became the first Dragon to drop out of the deal, followed by Willingham, who didn’t feel excited by the product. Suleyman thought it would take too much money to make the business work and also declined to invest.
“I like what you’ve done”, said Jones, “I think you’ve got what it takes and you understand the market really well. The window of opportunity is now and on the basis of that I’m going to make you an offer”. Yet it wasn’t all plain sailing for Klemt and Sark. Jones announced that he wanted a much bigger “piece of the pie” in exchange for the routes to market he could provide them with: offering all of the money for 30%.
Meaden then interjected: “Peter’s your man […] You’ve got a good offer from the right Dragon so, for that reason, I’m out”.
After discussing the offer, Klemt and Sark asked if Jones would be willing to drop to 15% equity. He wouldn’t reduce his equity, even after they raised it to 20%. The entrepreneurs decided to accept his offer.
Start-up business lesson: Although the pair had to give up over three times more equity than they’d planned, Klemt and Sark knew that Jones’s network could offer them the route to market they needed and additional value in the long run. Learn more about equity finance and managing shareholder expectations here.
Unfortunately the investment in LUPO has since fallen through. A day after the show aired, Jones Tweeted: “My investment with LUPO didn’t go through as some issues arose during due diligence. I still wish Raj all the best in the future.”