Dragons’ Den: Series 13, Episode 4 There was a mixed bag of pitches this week with two surprise offers from Touker Suleyman and Peter Jones' "worst experience in the Den"... Written by Megan Dunsby Published on 3 August 2015 Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. Written and reviewed by: Megan Dunsby Crafts and crisps were the winning pitches in this latest episode of Dragons’ Den, while the Dragons washed their hands of a potential investment in a toilet hygiene device.With emotions running high, tensions came to a head in a final closing pitch by a condiment entrepreneur who left Deborah Meaden angered and caused Peter Jones to declare “this has been one of my worst experiences in the Den!“.Read on to find out just what happened and the business lessons you can take from the pitches – including advice on attitude, market research and valuations….Mat CottamCompany: LOODINIConcept: Card-sized hygiene deviceInvestment sought: £35,000 for 10% shareInvestment received: NoneOpening with the line “two out of three men and one out of three women don’t wash their hands after they use the toilet” came Mat Cottam’s pitch for LOODINI – a device which helps people to “make a clean escape from dirty toilets”.Cottam demonstrated how the credit-card sized card can be taken out of your wallet or purse and used to open doors and handles without you having to touch them, by way of a handle cut-out on one side.While the pitch was certainly entertaining (fake loos were installed), the Dragons seemed unconvinced by the product and Suleyman was keen to know about the product’s target audience; explaining how Howard Hughes – renowned for his obsessive compulsive disorders – would have been an “ideal client”. Cottam disagreed and said the product had a mass appeal “for people who just want to maintain a reasonable level of hygiene”.The LOODINI founder’s £300,000 valuation then came under criticism from Suleyman as it was revealed that only 153 products had been sold. Yet, Meaden and Jenkins took more of an issue with the product.Meaden said that she already used plastic gloves for the same purpose so she was out and Jenkins suggested that toilet roll could be used in the same way. Cottam stated that to go back into the toilet and take loo roll would be “at the risk of looking a bit strange” which caused Willingham to retort “Did you just say at the risk of looking a bit strange?! I think I’d look a bit strange getting this [the device] out of my purse!”.Jones, Suleyman and Jenkins then declared themselves out of the deal which left Willingham with the final decider but it didn’t go in Cottam’s favour: “I love passion and I love bonkers […] but I think this is quite weird so I’m out.”Start-up business lesson: When presenting a product to investors, you HAVE to prove there is need and demand for the product in question – you also need evidence to back up your valuation. As Suleyman criticised; “You can’t pluck figures from the sky”.John TagueCompany: Tags Snack Foods LtdConcept: Handmade crispsInvestment sought: £125,000 for 5%Investment received: £125,000 for 30% with a ratchet to 20% (Meaden and Jones)With a goal to become the biggest family snack food business in the UK by 2025, John Tague was looking for a six-figure investment for his handcooked crisp business Tags. Already stocked in 197 Asdas, 35 Tescos, in talks with B&M retail and Morrisons, and with £760,000 turnover and £110,000 profit projected for 2016, the food entrepreneur’s pitch was an appetising one.Company traction was backed up by Tague’s knowledge of the industry, having previously worked as managing director for a successful crisp brand, and led Willingham to question “Why are you even here? What do you need a Dragon for?” While Tague said “the money would come in handy”, he admitted that he was looking for a Dragon that could help him “open some doors”; the main door being Sainsbury’s as he had been unable to “knock it down”.Suleyman then said he could get him into Marks & Spencer but Tague made it clear that he was targeting Sainsbury’s and had a vision for where he wanted his products stocked.Meaden was next to question the entrepreneur and, while not convinced by the branding – “it needs some work” – was won over by Tague and his knowledge of the industry. She made an offer of half the money (£62,500) for 10% of the business on the provision that Jones would be the other investor. Jones then raised the stakes and said he would make an offer of all of the money for 30% or half of the money for 15%, which Meaden matched. Willingham then joined the bidding war and advised Tague not to pick Meaden and Jones “as they both do the same thing” whereas she has “phenomenal contacts in bars, pubs, and nightclubs” and offered to match Jones and Meaden’s offers.Jenkins, admitting to a lack of industry knowledge, declared himself out of investing but Tuleyman entered the frame, making an offer of half of the money for 15% or the full £125,000 for 27%; undercutting the other Dragons’ offers.Weighing up the offers, Tague said that he wanted to choose Meaden and Jones but wasn’t comfortable with giving away 30% equity and tried to negotiate. After much too-ing and frow-ing and Meaden stating that she felt she was having “to kick someone dragging and screaming”, the trio were able to come to a happy compromise with Jones and Meaden taking a 15% stake each which would drop to 10% if they had a return within 12 months.Start-up business lesson: If your business already has traction, market interest and strong financials, you can and should negotiate on equity stake. Despite negotiations appearing to make Meaden and Jones uncomfortable, Tague was happy with the deal he secured in the end.Sarah Reast and Phil WilsonCompany: Timber Kits LtdConcept: Wooden toy model kitsInvestment sought: £25,000 for 15% equityInvestment received:£40,000 for 30% equity (Suleyman)Having taken the reigns over from her parents, Sarah Reast wanted the Dragons’ cash to grow her family’s wooden mechanical kit business Timber Kits.Pitching with business partner Phil Wilson, Reast explained that at the company’s height it had hit revenues of £190,000 with products manufactured at its headquarters in Wales but that manufacturing had since been relocated to China as it was cheaper. This last point rattled Meaden and she advised the duo to bring production back to the UK as the business had a “heritage feel”.However, it was the company’s “lack of retail ambition” which led many of the Dragons to decline from investing. Willingham’s questioning revealed that Reast and Wilson weren’t looking to high street retailers for growth and instead, their vision of “dramatic growth” was a £20,000 increase in revenues over the next four years.Unable to show an interest in retail routes to market, Willingham asserted that she was out and Jones followed suit; “I have a sense that this will remain a very small craft company”. Meaden and Jenkins also shared this opinion and opted out.Having remained fairly quiet throughout, Suleyman then made a surprise bid, offering Reast and Wilson £40,000 for 30% of the company, on the basis that he felt the company needed more than £25,000 to grow effectively. Reast attempted to negotiate and asked for 25% which Suleyman rejected. Ultimately, “Touker time” proved appealing for Reast as she chose to accept Suleyman’s offer.Start-up business lesson: While realistic growth projections are credited when pitching your business, there are just as many problems to “thinking small” as there are to “thinking big”.Fiona HoustonCompany: Mara SeaweedConcept: Seaweed condimentsInvestment sought: £100,000 for 3% equityInvestment received: NoneFiona Houston was looking for the Dragons to part with their green stuff for her green stuff – seaweed seasonings. Through her company, Mara Seaweed, Houston intended to turn a “forgotten superfood” into a healthy alternative to salt and her products had already been a hit with retailers; stocked in Harrods, Selfridges and Marks & Spencer (worldwide).While Houston’s pitch got off to a good start, it soon went awry as Jones began questioning the business valuation; “You’ve come in here with a valuation of over £3m so you must be making money already, I’m very intrigued.” But Houston’s response; “we made £200,000 turnover in the last 12 months and haven’t made a profit yet”, wasn’t one which Jones was expecting.The exchange between Jones and Houston then became more awkward as Houston expressed confusion over what gross profit meant and then explained that she had purchased the seaweed for £350,000, despite having only made sales of £200,000. Jones pushed on the valuation further and then, when Houston detailed a successful funding round, asked her how she raised the money to which she replied “What do you mean – how did I raise it?!”Meaden intervened and, noticeably angered, stated “Did you come in here looking for a fight? […] Your approach, for me, is completely alienating”. Houston apologised but Meaden made it clear that she would not be investing. Jenkins followed Meaden’s lead and declared himself out.Willingham then gave her view; “You’ve made it very hard to invest because no matter what we ask you, you’re so defensive so I’m out”.Following their earlier tense exchange Jones summised that the pitch had “probably been one of his worst experiences in the Den, of 10 years. I’m lost for words and I’m not going to invest.”Yet Suleyman, in a similar approach to Timber Kits, was still yet to reveal his cards and after deliberation decided to make an offer – “I’ll give you all the money for 50%”. Jones questioned whether it was a serious offer but this question was in vain as the duo felt it was too much equity to part with.On leaving the Den, Houston said the experience was like standing in “front of a headteacher and being told off”. Headmaster Jones from now on then!Start-up business lesson: Investors are bound to ask you questions that may rattle you or make you feel uncomfortable but you need to remain open and honest. Going on the defence will naturally create tensions between you and the investor. Share this post facebook twitter linkedin Written by: Megan Dunsby