Dragons’ Den: Series 13, Episode 5

Food dominated this week’s Dragons’ Den as two very different ranges sought to raise finance from the Dragons. Yet both ultimately failed with a shock investment withdrawal from Deborah Meaden alongside a pitch which Jenkins declared was “more like the business prevention department”.

For Sarah Willingham, however, a skincare business was able to rouse her interest and she made her first investment of the series – despite it being an industry far removed from her own.

Below, we share our summary of the pitches, feedback and key business lessons you can take away…

Colum McLornan and Claire Hunter

Company: Rule of Crumb
Concept: Gluten-free food range
Investment sought: £60,000 for 15% share
Investment received: None

First to enter the Den this week were Northern Ireland business owners Colum McLornan and Claire Hunter with their gluten-free food company Rule of Crumble; designed to provide a solution for those with celiac disease who are unable to eat gluten.

With evidence of business traction, including sales in the UK, Ireland, the Caribbean and France and interest from British Airways, retailers and supermarkets, the duo appeared to be off off to a good start but their pitch quite literally began to crumble.

Having sampled some of the range, Jenkins (gluten-free for the last 18 months) said the gluten-free bread tasted “horrible, really truly horrible” while Jones – on learning McLornan and Hunter already had a successful hotel company – questioned the duo’s commitment to the business: “Why do you need Dragon capital? Surely you could do this yourselves?”

But McLornan asserted that they needed Dragon backing to “get across the line” as they had been unable to open some doors with retailers such as Ocado, who had left them waiting around.

Willingham was more encouraging of the duo’s business proposition and said she liked “the idea of chefs being able to idiot proof their kitchen and have a route to feeding people gluten-free food.” But Suleyman wasn’t in agreement and followed Jones’ opinion with regards to management: “I don’t think I can invest in you as I don’t think you’ll be committed so I’m out”.

Jenkins and Jones also removed themselves from investing on the grounds that they couldn’t get “excited about it” and the market was too small.

This negative feedback was overlooked by Meaden who declared; “I actually don’t at all share the concerns of the fact that this isn’t your entire business, I feel you’re capable of setting up another business”. And with that, she made an offer of all of the money for a hefty 40% share. Willingham also showed her support once again and said she was considering investing.

But this positivity from Meaden and Willingham was short-lived.

Before having even received an offer from Willingham, Hunter asked Meaden if she’d be willing to share in a deal which caused great offence to Meaden; “Why ask to share it when I’m already in?!”. Despite a string of apologies, Meaden said the comments had made her change her mind and she withdrew her investment offer.

The pitch then came to a disrupt end when Willingham showed her cards: “I’m really sorry but there’s something that’s holding me back so I’m not going to invest.”

Start-up business lesson: Investors don’t offer money lightly so even if the offer isn’t what you were looking for, keep the investor on side and show that you value their interest. A few words, even if said in haste, can quickly sour a deal.

Dr Akhtar Khalil

Company: My Smart Remote
Concept: Car security device
Investment sought: £200,000 for 20%
Investment received: None

Said to resemble the early stages of producing Kitt; the much-loved vehicle from Knight Rider, came Dr Akhtar Khalil’s pitch for My Smart Remote; an app-based solution to car theft.

A security device that sits inside a car and is tracked via an app, My Smart Remote takes away the need for keys by allowing the car owner to unlock, lock and start the engine of their car from the password-protected app. Special features that can also be done remotely by the app included turning on your car heating and switching the car radio on.

But Jones didn’t see the point: “Why would I want an app remote for my car? Why do I need it?”

Meaden then questioned the market opportunity and didn’t seem too impressed by the figures when Khalil revealed he had spent £200,000 developing the technology and had only sold 10 devices.

Jenkins then identified a major flaw to the device when he realised that if his phone or tablet was dead, and he had no access to a charger, he wouldn’t be able to unlock his car. Based on this practical limitation, the Moonpig founder exited the deal. Suleyman followed Jenkins’ lead; “You seem like a very intelligent man but you need to focus […] you’re either in security or gadgets so I’m out”.

The business wasn’t to Willingham or Meaden’s taste either and Jones then concluded Khalil’s time in the Den; “There are just too many whys and too many questions that need answers. I’m not going to invest so I’m out”.

Start-up business lesson: You need to be able to prove demand and a need for your product. Even if your business idea is fun and/or innovative, an investor will only invest if there’s market potential.

Polly Gotschi

Company: VitiliGlow
Concept: Cover-up make-up for vitiligo sufferers
Investment sought: £37,500 for 30%
Investment received: £40,000 for 40% (Willingham)

Skincare entrepreneur Polly Gotschi delivered a moving pitch for her product business VitiliGlow; make-up cover-up targeted at those suffering from vitiligo – a skin condition which causes white patches to develop on the skin due to a lack of melanin.

Having suffered with vitiligo herself, Gotschi explained that she created the cream following frustrations at what was available on the market. She said she felt the product had the potential “to transform people’s lives” given that the condition affects 1% of the population and over 600,000 people in the UK.

With sales of £16,000 in the first 12 months with no marketing spend, the Dragons were keen to find out if Gotschi’s make-up had staying power.

After testing the product to see how it worked, both Meaden and Willingham seemed impressed but Meaden uncovered that Gotschi had made an error in the packaging as she had “forgotten” to put a trademark on the packaging – a mistake which led the Dragons to doubt Gotschi’s business acumen.

Jenkins then questioned Gotschi’s marketing tactics and was impressed by her personal approach; “I do a lot of blogging, I answer emails, share support stories and give them advice” but Jenkins was of the opinion that she would be able to do it [growing the business] herself and wished her good will but said he was out of investing.

Jones also felt the product was “great” but said that he couldn’t see Gotschi “making a lot of money out of it” and wouldn’t be investing. Meaden then announced herself out of investing on the basis that Gotschi’s social consciousness could create issues when expanding commercially.

Becoming known for his surprise offers, Suleyman told “Gotschi” that while “you’re all over the place, I like you and I like this product” and made a bid to become a 50/50 partner in order to build VitiliGlow into “big business”. The investment was offered on the provision that Suleyman could take over the operations and make Gotschi the face of the brand – offering the full £37,500 for 50%.

Willingham was also made-up by Gotschi’s pitch and, having “been really impressed”, made an offer of £40,000 for 40% and subtly criticised Suleyman’s offer: “I want you to keep the majority of your business […] it has to remain your baby”.

This comment led Suleyman to have a rethink and reduce his stake to 40% but it was clear Gotschi had already made her mind up: “Thank you but I want to go with Sarah.”

Start-up business lesson: While VitiliGlow secured investment and received positive comments from the Dragons, the business’ commercial viability came in to question. Demonstrate to investors that you have the ability to scale your business and have considered routes to market for expansion.

Paul Maden and James Findlay

Company name: Cocoa Mountain
Concept: Gourmet chocolate
Investment sought: £80,000 for 15%
Investment received: None

Determined to create a chocolate “paradise in heaven”, life partners Paul Maden and James Findlay delivered a nervous pitch for their gourmet chocolate and drinking chocolate range Cocoa Mountain. Located in the small Scottish craft town of Durness, the duo explained they had been running the business for nine years and created the chocolate using ethical, locally sourced ingredients.

The chocolate went down a hit with all of the Dragons – Willingham even said it was “real magic” – but the business’ financials were less pleasing to the investor panel.

On finding out that the company had achieved gross profit of £123,000 and net profit of £57,000 after nine years trading, Jenkins said the company’s lack of scale sounded more like “the business prevention department”.

This opinion was enforced when the duo revealed they had turned away a lot of business because they had been unable to produce large quantities of their products due to local recruitment issues being based in one of the most “geographically remote locations in Europe”, and were only just considering moving premises to a more central location.

Meaden agreed with Jenkins; “It’s lovely story but I’m not getting the drive from you – I’m out”. Willingham also declined to invest but advised Maden and Findlay that they should “find someone who can produce the chocolate on a large scale and then sell it.”

Suleyman didn’t feel he was the right investor either and Jones asserted he was out, as despite being a fan of the chocolate, he couldn’t “sense any urgency”.

As the duo prepared to depart the Den with no investment, Jenkins summarised his and his fellow Dragons’ concerns: “I want people that are hungry to do business and you’ve just been turning away business over the last nine years. I’m out.”

Start-up business lesson: Drive and hunger are necessary ingredients for any successful investment pitch. Cocoa Mountain was described as being similar to a lifestyle business in how it was being run, so you need to think bigger if you want angel backing.