Dragons’ Den: Series 14, Episode 11
Business success this week for illuminated tops and a beauty company founded by one of the "most impressive" entrepreneurs the Dragons had ever seen
This week's episode saw two investments for an interactive glow ink t-shirt brand and a beauty subscription box from an entrepreneur that Peter Jones described as one of the “most impressive” he'd seen in the Den”.
Elsewhere a serial inventor failed to excite the Dragons with his biodegradable cable tie solution while an intimate waxing business walked away with plenty of compliments but no funding.
Read on for the business lessons you can learn from this week's winning pitches and how to avoid the same mistakes as those that left the Den empty-handed…
Concept: Intimate waxing
Investment sought: £50,000 for 10% equity
Investment received: None
First to face the Dragons was Gemma Cafferkey, the founder of “the UK’s first truly dedicated express intimate waxing system”.
As well as selling a range of “intimate products”, Waxu acts as a branded consumer service. Unlike rival systems. Cafferkey said her wax sets on contact with the client’s skin – speeding up the process and enabling a salon to complete more treatments – and can be applied in a thin layer while remaining flexible – making for a “more comfortable” experience.
Since launch six months ago, Cafferkey outlined that Waxu had moved into 55 salons in the UK and a salon in Iceland. Less really is more: “Less wax, less time, less discomfort, more appointments, more profit, more happy clients” the entrepreneur concluded.
Sarah Willingham wanted to know how Cafferkey had built relationships with the salons to which Cafferkey responded: “It’s almost like a business in a box. You get the equipment, you get the products, you get enough for 50 treatments, you get the branding and then you get the training” for an entry point of £350.
The entrepreneur explained her product typically lasted two to three months, with additional payments of £200 for new products, equating to around £1,500 per salon every year.
Deborah Meaden wanted to know more: “Are retailers dropping their price point because it’s a much simpler, quicker process?”. In fact, Cafferkey said she encouraged salons to increase their waxing service by a few pounds because customers were prepared to pay more for a quicker and comfortable process.
Jones's query was whether Waxu was a unique invention and Cafferkey confirmed that it was; she had developed the formula in conjunction with a chemist, whom she had a non-disclosure agreement with.
Though she was unable to provide figures on the size of the potential market, the entrepreneur revealed her salon had turned over £400,000 a year, with around 75% of that amount coming from intimate waxing; netting £110,000 in profit.
This raised some questions for Meaden about why Cafferkey needed the investment: “Why have you chosen to separate this as a product and not join it together with its spiritual home?”
Jones shared Meaden's view: “I think the two need to go together and I think your business here is one. So I’m going to say I’m not going to invest”.
Jenkins, Willingham and Meaden were all very impressed with what Cafferkey had achieved so far but declined to invest, as they didn’t think they could add anything.
Suleyman concluded: “All you’ve got to do is test the market in a much bigger market and just see what happens […] because that could open a whole new door for you […] Keep the whole business for yourself because you’ve already got a whole business that could finance it”.
Start-up business lesson: While Cafferkey didn’t secure investment from the Dragons, she left the Den with some encouraging words of advice; primarily not to source investment if you can finance a business yourself. Nevertheless, Waxu's appearance on the show will have provided valuable exposure. Find out how to start a beauty salon here.
Company: Illuminated Apparel
Concept: Interactive glow t-shirts
Investment sought: £50,000 for 15% equity
Investment received: £50,000 for 20%
Next into the Den was 24 year-old Rob Manley, the founder and inventor of Illuminated Apparel. The entrepreneur had invented a unique glow ink which he claimed was 10 times brighter than standard inks available.
Set into an interactive panel on the front of a t-shirt, the wearer can draw anything they want using a UV keyring, mobile phone, torch light or laser pen. The product has a lifespan of 20-30 years.
After previous setbacks with manufacturing, Manley explained that he had gone back to the drawing board for one last chance at business. He said that this time he had “got it right”, with £30,000 in t-shirt sales in one month and listings with two major online gadget retailers.
Willingham felt the product would be pointless in daylight but had to admit that: “My kids would love this”.
Despite a checkered entrepreneurial history, Manley impressed the panel of angel investors with his talent for improvisation; building £1,000 of equipment for £20 from a scrap heap.
Manley amazed the Dragons further by revealing that he’d been sleeping on his office floor with just enough money for food. This self-determination assured Meaden that Manley was committed to the business: “I don’t need to know anymore […] so I am going to make you an offer – all of the money, and I want 20% of the business”. Meaden also offered her links to the holiday camp market, which she explained could be a very lucrative sector to crack.
Fashion entrepreneur Suleyman wanted to know if anyone could copy the illumination technology and, unconvinced by Manley's reponse, Suleyman declined to invest on the basis that he felt bigger brands would undercut the business.
For Jones and Jenkins, their reasons for not investing were on the grounds that they didn't share the passion or enthusiasm for the business as Manley.
Willngham also bowed out of investing but advised Manley to accept Meaden’s offer, which he promptly did.
Start-up business lesson: Manley entered the Den with a pitch for a good product and a good story that showed he had the guts and gumption to make his business work. He also overcame a fear of failure to try again at launching a business.
Concept: Biodegradable cable ties
Investment sought: £80,000 for 20%
Investment received: None
Up next was Lancashire-based entrepreneur Simon Moore, a self confessed serial inventor who was looking to raise £80,000 for what he alleged to be the world’s first biodegradable and compostable cable tie.
With an estimated 70% of the 100 billion cable ties produced around the world every year going to landfill, Moore was hoping to create an environmentally friendly alternative and “stop our rivers, our streams, our oceans and our streets being clogged with cable ties”.
The inventive founder didn't have a good start when the tie he'd given to Jones didn't work but he proceeded with his pitch
Moore explained that the UK patented product doesn’t start to degrade until it goes to landfill, with B&Q, Tesco, Asda and Marks & Spencer all interested in his product.
Meaden asked what else Moore had invented and got a surprising response as Moore listed off a number of inventions including a surfboard that makes it easier to catch waves and a parachute he was “looking at taking to NASA”. The entrepreneur, who usually earns his living from property renovation had also just released his first novel.
Back to the product pitch and Suleyman was eager to find out more: “I’m in the clothing business and we use a lot of these to transport products […] and it’s probably the most competitive business in the world – so what does this cost to produce?”
“About a penny”, Moore claimed – the same as a traditional cable tie – but the cost didn't add up for Suleyman and he became the first to exit the deal.
Jones' concern thought was that, of the 40 odd products Moore had invented over the last 30 years, none of the products had made it to market.
Jenkins agreed with Jones: “If you want to make money, focus on one thing, and do it well – don’t suddenly start trying to invent a parachute in the middle of your project […] I’m out”.
Willingham, Jones and Meaden were equally as unimpressed in the product.
Start-up business lesson: Though Moore charmed the Dragons with his zany inventor personality, his product fell down at the first hurdle – it didn’t actually work. Investors want to see a product that’s ready to go to market. Find out how to patent a money-spinning invention here.
Company: Love Me Beauty
Concept: Beauty box subscription website
Investment sought: £80,000 for 3%
Investment received: £80,000 for 8% equity shared between Jenkins and Willingham
The Den’s final contender was London-based Oliver Gauci, who was pitching for investment in his beauty box subscription website Love Me Beauty.
For a subscription fee of £10, members receive monthly bags of beauty products – with a retail value of £45 or more – from over 100 cosmetic brands. Consumers are profiled for skin type, hair type and disposable income to be matched to the correct product recommendations.
Gauci disclosed that the company had secured 92,000 members and 5,000 premium members, netting the business £52,000 and making it profitable.
Meaden wanted to understand how Gauci could afford to give away products valued at over four times more than the monthly subscription. Gauci answered: “When we first started, we used to make a contribution to the cost of the products, now we’re getting products for free from the brands”. However, Meaden was still left unsure as to whether this was sustainable business model.
Interest from the Dragons was renewed though when Gauci revealed the company had secured a deal with Debenhams to access the retailer's huge database of customers.
Willingham seemed impressed by the proposition: “So you get people signing up for a subscription that’s 1,000 people and it costs you nothing, Makeup Forever hopefully get a new loyal customer and Debenhams hopefully are getting people to go back into Makeup Forever – so it’s like a win-win for everybody”.
Jenkins was next to question Gauci and wanted to know the entrepreneur's long-term vision for the company.
Gauci shared a forecast that, in the business' third year of trading, it “would make £6.2m and a profit of £1.2m”.
Jenkins was impressed: “So there’s a possibility of a four times return…” but Willingham was sceptical: “It’s an enormous leap. Can you give me example of other brands that have achieved these kinds of figures?”
Gauci said there was a similar US brand valued at £800m that had been trading for 18 months.
Next up for Gauci to impress was Suleyman, who was more interested in finding out what Gauci needed the Dragons investment for: “What doors do you want opened?” Gauci explained that he needed “people to help shape up the business so it’s scaleable. I want to take the company international. I don’t have the experience to do that”.
This response satisfied Suleyman and he made an offer of the full £80,000 but for an equity stake of 25%.
Jenkins didn't agree with Suleyman's valuation of Love Me Beauty, stating that he thought Gauci was “extremely investable”, and offered him all of the money for 5%, adding that he’d be willing to split.
The usually hard to please Jones said Gauci was “one of the most impressive entrepreneurs” he’d seen in the Den, but declined to invest on the basis that he’d want more than Jenkins had already offered. Meaden followed suit as she was unable to see eye-to-eye on his valuation. Suleyman wasn’t prepared to revise his offer down and also withdrew form the deal.
Having revealed being a fan of the online subscription space, Willingham made her bid; offered all of the money for 8% or £40,000 for 4% to share with Jenkins.
Gauci accepted the partnership of Jenkins and Willingham – marking the start of a ‘beauty-ful' relationship for the subscription box specialist.
Start-up business lesson: Preparation is everything in the Den and, while Gauci did have an impressive business with fast-growth potential, the panel were equally impressed by the fact that he was an “extremely investable” person. As Nic Brisbourne of Forward Partners advises here, investors will often look for an entrepreneur who not only has a great idea but who is also a great leader and will be fantastic to work with.