Dragons’ Den: Series 14, Episode 3

Nick Jenkins tucked in to some traditional pub grub this week while four of the five Dragons decided an upcoming fashion brand was 'on trend'...

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Snacks, style and selfie statues; the Den was awash with a variety of business pitches this week as two start-ups walked away with investment while two others were unable to tame the Dragon investors.

Nick Jenkins added a pig-themed food business to his “porkfolio” while former Startups Awards judge Touker Suleyman had a damning verdict for a pitch perfect fashion business; which would later turn out to be a bluff.

From advice on getting your accounts in order to demonstrating market opportunity, read on for our summary of the latest pitches and the key business lessons you can take-away…

Sylvain Preumont

Company: Mini You
Concept: 3D -printed “selfie” model statue figurines
Investment sought: £80,000 for 15%
Investment received: None

French entrepreneur Sylvain Preumont was the first to take to the Dragons’ lair this week with a pitch for his “ultimate selfie” product; personalised model statues made using 3D-printing which can be made from a number of materials such as metal, chocolate and wax (“we call it a scandle” – selfie candle).

Preumont said the business had been running for three years and had, in that time, secured partnerships with Selfridges and Le Bonne Marche in Paris. He wanted the investment to launch a spin-off miniature model business.

Nick Jenkins was the first investor to air concerns, citing issues with the size of the market: “What kind of person wants a statue of themselves?” Preumont responded with his sales figures to date: “We have sold around £2,000 figurines for around £150 each”. Despite the size of the market opportunity, Jenkins said he was impressed by the quality of the product and the “clever” innovation.

Suleyman wanted to get to grips with how the business worked and Preumont explained that he owns the 3D scanner to make the models and had another company selling 3D printers with both an online presence and bricks-and-mortar store but “it’s not that big”.

Jones then revealed a major flaw of Preumont’s pitch – that anyone could own the 3D technology to make the selfie model statues. Preumont revealed that the 3D printer required to make the models could be purchased for £70,000 which shocked Jones who explained that Preumont didn’t have a business; “I could go and buy the scanner, make all the figurines myself and not have to give away equity!”

Meaden wanted transparency on the figures and the profit of the business to date but Preumont was unable to give an answer. After further questioning from Meaden, he responsed “I’d imagine it was somewhere between £50,000 and £100,000” and this response antagonised Meaden – “You can’t just throw your hands up in the air [with a ballpark figure], give me an answer”.

Like Meaden, Willingham wanted further clarity: “Let me get this straight, you don’t wone any of the technology. You’re selling us an idea for a business that has currently got a relationship with Selfridges and Bonne Marche, is that worth the money that you’ve put on the valuation?”

Preumont’s response: “That’s what I believe, the reason why I’m here today is because with your expertise, your marketing, your network and my technical expertise we could make this work.” Yet again, this answer didn’t satisfy Meaden who laughed as she explained to Preumont that the added value to the business was coming from the investor panel and not Preumont -“I’m sorry but I won’t be investing.”

Suleyman followed Meaden’s lead: “I don’t believe that a business making portraits out of 3D printing […] has the ability to scale so I’m out.” and so did  Willingham: “I can’t get past where the real value in the business lies so I’m out.”

For personalised gifting entrepreneur Jenkins though it was the size of the market that held him back: “This strips away the most important thing [of personalisation] which is about memories and you can’t recreate that in a scanning booth. Funky though this is, I’m out.”

Preumont’s time in the Den was to come to an unsuccessful end as Jones confirmed he was unable to set aside his earlier concerns:

“I’d love one of these for myself and I’m sitting here as the owner of a photography business thinking you could trial them in some shops and see how they work but my issue is more to do with you. You’ve said that we bring more to the party and that’s where you went wrong today and why I’m not going to invest.”

Start-up business lesson: Preumont’s pitch went wrong for a number of reasons: He didn’t share his financials, his business wasn’t unique in so far that anyone could recreate it, and he couldn’t evidence how he could add value to the business without investor input. 

Beth Chilton and Sarah Sleightholm

Company: Alter London/Hope & Ivy
Concept: Two new fashion brands – one featuring smart workwear and another focused on embroidered occasion pieces
Investment sought: £78,000 for 15%
Investment received: £78,000 for 25%, moving to 20% with a buy-back (Deborah Meaden and Peter Jones)

With 13 years’ combined experience in the fashion industry, design duo Beth Chilton and Sarah Sleightholm gave a stylish pitch with a fashion show walkway for their two early-stage fashion brands – Alter and Hope & Ivy.

The pair explained that they launched the two brands after noting emerging gaps within the high street market and their idea appeared to have taken off – having secured £250,000 worth of orders from ASOS and attracted interest from Next and Lipsy.

Peter Jones begun the questioning and wanted to know more about the founders backgrounds. Sleightholm explained the she had a degree in fashion and had previously worked at ASOS while Chilton had degree in fashion management and she had also worked at fashion brands – all good news to Jones’ ears.

Willingham wanted to get down to figures and why the pair were looking for £78,000. Chilton outlined that they were mainly looking to use the funding towards marketing; specifically with regards to making use of trending bloggers and vloggers who could get the word out.

On this note, Jenkins revealed that there would no point him investing because of his “lack of knowledge in the sector” and Suleyman then deal the female entrepreneurs a blow with a damning assessment:

“Your biggest risk at the moment is that your relationship with a particular buyer, if for instance that buyer gets moved onto a particular department you’re in trouble. This is not unique and I actually think you’ve been lucky until now. […] You’ve got two brands so you’ve got to double your costs. Already your stretching yourself thin, I think you should only work on one brand.”

This last comment was to the dismay of Chilton who quickly asserted: “Why would we stop running one brand that is doing well?!”

Jones’ initial enthusiasm in the business was unswayed however and , while noting that Suleyman’s comments did matter to him, he made an offer off the full £75,000 for 25% on the grounds that he could “make a difference”.

This enthusiasm was shared by Willingham – who made a buy-back offer for 25% equity, with a ratchet to 15% – and Meaden who offered the full £78,000 for 20%.

It then became clear that Suleyman had been bluffing and planned to invest in Chilton and Sleightholm all long: “I think you need a lot of work but I will make an offer of all of the money for 40%”.

While Suleyman had been the founder’s original investor of choice before entering the Den, the 40% equity stake would prove too much and the design duo asked Meaden and Jones if they’d consider sharing the equity stake and dropping down to 20% (10% each) once the money had been returned.This offer was one that Jones and Meaden were “delighted to accept”.

Start-up business lesson: Practically pitch perfect, Chilton and Sleightholm had all the winning credentials to get investors on board – impressive turnover and profits, industry partnerships, strong background, and a strategy to scale their business. 

Anneka Chauhan and John Chauhan

Company: i-stay
Concept: Luggage straps “that stay put”
Investment sought: £50,000 for 10% equity
Investment received: None

Next into the Den was father-daughter innovation i-stay. Launched in 2012, the i-stay is a non-slip shoulder strap for bags and rucksacks which is patent-pending and can clip onto any bag with d-rings.

John Chauhan outlined the company’s financials with:

2013 – £130,000 turnover and net loss of £75,000
2014 – £240,000 turnover and £22,000 net loss
2015 – £290,000 turnover and £21,000 net loss
2016 (first six months) – £150,000 turnover and £20,000 net return

From the get-go, Willingham wanted to know why the pair’s business had made such a loss and John Chaunhan explained that he had put in £100,000 in initial investment but, even after accounting for £120,000 in paid stock and staff wages, the numbers didn’t add up and didn’t sit easy with Willingham.

Similarly, Suleyman had concerns about the company’s balance sheet: “If the business started with £100,000 and you’ve lost about £120,000, I can’t work it out! You must owe someone a lot money?”

John then revealed that £100,000 was owed to Falcon, the company he owns with his wife, but this detail still didn’t provide clarity to the numbers as John still attested that Falcon had only paid in £100,000 to i-stay.

Jenkins tried to clarify further: “What Suleyman iss trying to get to the bottom off is the fact that if you put in £100,000 from day one and have £120,000 in trade losses at the end of it, you must have put in £220,000… or your accounts are wrong.”

Jones also questioned the figures and it became very clear that the Chauhan family couldn’t explain their finances. “You’ve made me nervous when it comes to investing so I’m out” – Deborah Meaden.

Suleyman: “There’s no way you would want me as a shareholder in the family business as I might end up firing your dad, I’m out.”

Willingham: “When there is such a close knit family, it makes it difficult for an outside investor. I’m out.” Jenkins also didn’t believe the business had longevity and announce he was out.

For Jones, it was the duo’s lack of business expertise that concerned him most; “Neither of you seem to know what you’re doing so  I don’t want to be part of it.”

As they left the Den, presenter Evan Davis reflected “The business called i-stay, goes”.

Start-up business lesson: The dragons were nervous about backing a business with confusing finances. The Chauhan’s business numbers didn’t add up, which ultimately saw them leave the Den empty-handed.

Andrew Allan and Nick Coleman

Company: Snaffling Pig Co.
Concept: Range of pork crackling snack products
Investment sought: £70,000 for 10%
Investment received: £70,000 for 20% (Nick Jenkins)

With trends moving towards British food and drink culture – “beers have gone craft, burgers have gone gourmet, and popcorn has even turned adventurous” – Nick Coleman and Andrew Allan explained that they had given a refresh to a “humble but awesome snack”. A “pig reveal” showed this snack to be the pork scratching with Coleman and Allan having created the Snaffling Pic Co.

Using prime cuts of pork and 11 different flavours, the foodie entrepreneurs gave a confident pitch with projections of £6.9m turnover by year three.

While the duo were keen to “take this little piggy to market”, Meaden expressed some immediate concerns with the calorie intake of each product at just over 600 calories a bag. This calorie intake issue would later see Meaden pull out of investing as  of their business as it went against her approach to organic and healthy businesses.

For Willingham, it was the actual food in question that she didn’t want to invest in: “As a business opportunity, you guys are so backable but I’ve also got to want about the product and pork scratchings make me gag so I can’t invest, I’m out.”

Suleyman echoed Willingham’s belief that the founders were backable but said that because he didn’t eat pork, he had to stick to his beliefs and couldn’t invest.

Far removed from personal preferences and values, Jones’ reasoning for not wanting to invest was down to market longevity: “I’ve done something similar with a business which was popcorn-related. At the start we did really well and then some stiff competition came into the marketplace. I think that your margins will come under pressure as you scale. […] Pigs might fly but you’re not going to get investment from me.”

However Jenkins – who said he had an affinity with “all things swine” given his Moonpig brand – would go on to save Coleman and Allan’s bacon: “I’ll invest but I want 20% of the business to make it worth my while”.

Coleman then attempted to negotiate the offer with a buy-back deal to drop Jenkins’ equity share to 10% in 18 months once they had reached their profit projections. This deal was accepted by Jenkins who gleefully announced “The pigs have merged!”

Start-up business lesson: While the Snaffling Pig Co. was able to secure investment from Jenkins, scalability and business longevity was a sticking point for Jones. 

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