Dragons’ Den: Series 14, Episode 12

Business lessons galore as a bike light indicator secured investment from Nick Jenkins while an unproven franchise model caused friction

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This week in the Den we saw an entrepreneurial duo find a business partner in keen cyclist Nick Jenkins, while another founding pair weren’t prepared to offer Peter Jones more equity for investment in their honey-infused water business.

Meanwhile, a range of children’s dolls was judged too “eerie” to secure investment and an entrepreneur offering a beauty franchise opportunity failed to offer any evidence that his business model would work.

Read on for the start-up business lessons you can learn from this week’s Dragons’ Den pitches…

Joe Harper and Andy Sugden

Company: Just Bee Drinks
Concept: Honey-infused, fruit-flavoured water
Investment sought: £65,000 for 10% equity
Investment received: None

Sporting full beekeeping gear, the Den’s first entrants this week were Joe Harper and Andy Sugden with their range of honey-infused, fruit-flavoured water – Just Bee Drinks.

Instead of using refined sugars or artificial sweeteners, the company uses a single drop of honey to create its range of natural drinks, all under 50 calories.

After a few months of trading, the pair explained that they had already secured listings in Selfridges and Fortnum & Mason, as well as 100 outlets across the UK and Ireland including delis, coffee shops, hospitals and office canteens.

Having recently “started discussions” with national retailers, the entrepreneurs said they felt now was time to bring a Dragon on board to help them with the “exciting” next stage of growth.

Peter Jones was first to comment on the business proposal: “My first reaction is ‘why hasn’t this happened before?’” – and wanted to “quantify” the sales success Just Bee Drinks had achieved so far.

The pair revealed that the business generated £50,000 in its first 12 months, with an operating loss of £38,000, having each injected £33,000 into the business at the start, as well as an additional £150,000 investment from a high-net worth individual for a 23% stake. Jones asked if he was right in thinking their “net assets are currently sitting around £170,000?”.

They currently had £45,000 in stock, “about £19,000 of debtors, about £94,000 of cash and £36,000 of creditors”. This meant their net position was about £121,000. Jones thought it was “very impressive” that they had all the figures to hand: “We’ve spent 20 minutes trying to get that out of some people.

Meaden asked about the sustainability of their business: “One of the problems that have caused colony collapse is intense farming of bees”. Harper claimed they left enough honey for their bees to survive the winter instead of removing all of it from the hive. However, Meaden admitted she didn’t “really like the taste”, identifying a “slightly antiseptic” flavour. Nick Jenkins and Jones said they could also taste it.

Sarah Willingham, who “loved” the product, agreed with Meaden didn’t think the drink was “a very mass-market flavour” and said it would need a “lot of power and a lot of marketing”. She also thought the price point of £1.69 was “a luxury” – too premium as a supermarket product.

Jones asked why they hadn’t thought of bringing out the ingredient that goes into their water “in a bee-like squeezy” packet – which he thought could go mass-market. Inspired by this potential, Jones offered the full amount for 25%.

Following Jones’ offer, Meaden revealed she loved the brand but couldn’t get past her personal issue with the taste so was ‘out’. Jenkins and Willingham also bowed out of investing, alongside Touker Suleyman who felt Harper and Sugden had “a perfect offer from the perfect Dragon”.

Harper attempted to make a counter-offer to Jones of 25%, after revealing the business was in the listing process with Waitrose, Boots and Whole Foods but Jones wouldn’t budge on his offer and neither would the drinks founders.

On leaving the Den empty-handed, the Dragons appeared to hold the unanimous view that Harper and Sugden had made the wrong decisoin.

Start-up business lesson: While the entrepreneurs can be admired for sticking to their guns on their valuation, Jones’s involvement could well have boosted future growth. Find out how to start a beverages business like Just Bee Drinks here

Frances Cain

Company: A Girl for All Time
Concept: Toy dolls with books
Investment sought: £70,000 for 10% equity
Investment received: None

Next to face the Dragons was Frances Cain, a female entrepreneur who had created a range of toy dolls for children with a book detailing their background history, designed “to celebrate and empower girls through creative, imaginative play”.

Founded four years ago after feeling frustrated at the lack of suitable toys for her own daughter, Cain’s dolls follow the “adventures of the Marchmont family through 500 years of time” with books that celebrate “the girls as heroes in their own stories”.

As well as winning a “cachet of awards”, A Girl for All Time had hit sales of just under £90,000 in 2015 with 125% growth in the first four months of 2016.

Jones, who he had become “quite an expert in dolls” after watching his daughters grow up with them over the last 20 years, admitted he found Cain’s dolls “a bit eerie”: “I look into this doll’s eyes and there’s sort of a darkness there”.

Suleyman wasn’t sure if there was a USP that could turn it into a multi-million pound business. Cain: “As far as I know we’re the only brand on the market that does an entire family series that does these kind of stories […] and creates a depth experience”.

Willingham claimed to be “absolutely” Cain’s target market but said she wouldn’t buy one for her daughter: “You want to sell the story of trying to empower your little girls to believe that they can do anything and be anything. I don’t think that’s what you’re achieving through these dolls”. Willingham declined to make an offer.

Cain then sent heads rolling when she revealed she had spent £400,000 of her own money – and money from friends and family – developing the business over the last five years. Meaden wasn’t impressed and noted that she “just didn’t like it” while Jenkins “just didn’t get it” – both exited the deal. Suleyman agreed, noting that the business had no appeal to him.

Jones final advice to Cain was “go back to the drawing board”, as the dolls were just too eerie for him.

Start-up business lesson: While the Dragons admired the story behind the business, there was a fatal flaw with Cain’s product. Market research of her target market could have ironed out this major issue.

Damien Zannetou

Company: Aenea
Concept: Beauty salon franchise
Investment sought: £100,000 for 10% equity
Investment received: None

Next into the Den was serial entrepreneur Damien Zannetou pitching an opportunity to invest in a new beauty “wellness concept” Aenea. Aenea is a franchise model which combines the “hair and beauty, salon, spa and clinic experience all under one roof”, as well as offering a private label product line to professionals and retailers.

Zannetou cited the franchise model as a way to achieve “rapid roll-out within the territory” of the premium anti-ageing product business, while creating a distribution network for the cosmetics range.

Zannetou then revealed he was intending to open 20 stores in the UK within the next three years, as well as 20 in the Middle East. Each franchisee pays a license fee of £25,000 for a five-year term, with a 10% monthly management service fee and a monthly marketing fee of 2%. To date, Aenea had signed one franchisee in London and had pending applications for Bristol, Liverpool and Brighton and Saudi Arabia, Dubai and Bahrain.

Yet the pitch didn’t kick off to a good start – Zannetou’s samples either broke or didn’t work properly. Jones’ response? “Not a good first impression with the products […] but I’m keen to understand – what on earth is this business?” he was frustrated with the confusing and multifaceted offering of the company, despite the entrepreneur’s attempt to explain. “Why wouldn’t they just do this on their own, why do they need you?”

Zannetou: “They can do it themselves but the fundamental difference is we’ve combined the three models together […] and they don’t have their own product line”.

Jones: “But why would I sell them your product line that breaks when you use it and it’s a brand that nobody knows, over putting in my salon brands that everybody understands and knows and wants to buy?”

Zannetou’s salon had turned over £750,000 a year but admitted he’d run into a trademark dispute over his product line and had to liquidate the company because third party lawyers and accountants told him to do so.

Digging down into the financials, it emerged Zannetou’s franchise had only made £1,000 profit the previous month, which cast serious doubts over the £1m valuation. Confidence in the entrepreneur waned further when he showed a misunderstanding over the concept of discounted cash flow. This seemed to arise from an over-reliance on third party consultants, which troubled Jenkins…

Jenkins: “What you’ve shown to Peter is you have no idea what you’re talking about […] You, Damien, are supposed to be telling me how to run a business – how am I supposed to have faith in that?”

Despite Zannetou’s insistence that his digital marketing knowledge could make his franchise a success, he was unable to provide fact-based evidence that the company could make money. Meaden wasn’t convinced and became the first to exit the deal.

Willingham, who had found success in the franchise industry, was next: “You should not sell a franchise without having proven the model and that is why I’m out”. Suleyman and Jenkins shared Willingham’s point on proof of concept and bowed out.

Jones: “I think you have come in here without anything of substance. I think you clearly need to go away and rethink how you’re going to do this”.

Start-up business lesson: Zannetou had no proof of concept for his franchise business. If you’re going to launch a franchise, investors and prospective franchisees will want proof that it’s going to scale and, ultimately, make money. 

Luca Amaduzzi and Agostino Stilli

Company: CYCL
Concept: Direction indicator for bicycles
Investment sought: £45,000 for 5% equity
Investment received: £45,000 for 12.5% equity

This week’s final hopeful entrepreneurs were Italian entrepreneurs Luca Amaduzzi and Agostino Stilli. Having found navigating London’s busy streets difficult when they’d first moved to the capital, the pair had invented WingLights.

A direction indicator for bicycles that flashes amber on the side of your handlebars, WingLights are easy to fit, and the magnetic product could be turned on and off with a single tap.

Trading since July 2015, the company had already sold 8,000 units across 14 different countries around the world; generating revenue of £136,000, with a gross profit of £96,000 – allowing them to break even.

Meaden: “It feels nice, it looks good. My objection to this would be it’s visibility, because actually when you were riding in circles there was quite a lot of time when I couldn’t see that light”.

However, Jenkins a cyclist, begged to differ: “Actually, the question of having it on the handlebars, it’s the widest part of the bike. And actually if you have it on the back you have to have a stalk coming out”.

Jones demonstrated Meaden’s concern by climbing onto the bicycle and asking if they could see his lights, with the Dragons divided over their visibility.

Willingham: “Because I’m so used to things flashing on a bike, I don’t know that that’s an indicator. That could just be a light”.

Jenkins disagreed again: “A flashing orange light to the side of scooter or motorbike generally indicates turning”.

Co-founder Stilli argued that the hand signal wasn’t a very convenient method of indicating intent to turn as it diminished control of the bike but Willingham couldn’t get pass her original concerns and became the first Dragon to exit the deal.

Having praised the product design, Jenkins went on to praise the CYCL’s impressive financials and made Amaduzzi and Stilli an offer: all the money for 15%.

With the other Dragons having exited the deal, Suleyman was the last to reveal his cards and, after boasting of his connections in the cycling sector, made the entrepreneurs an offer of £60,000 for 25%.

However, it was clear that Jenkins’ enthusiasm had won Amaduzzi and Still over and, after agreeing to reduce the equity offer down to 12.5%, the pair accepted Jenkins’ deal.


Start-up business lesson: Amaduzzi and Stilli’s solid pitch won over keen cyclist Jenkins and the duo were even able to negotiate Jenkins’ offer down. 

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