Dragons’ Den: Series 15, Episode 2

With the bank holiday weekend serving up the season finale of Game of Thrones, BBC Two viewers were served up a dragon fight of a different kind...

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The second installment of series 15, this bank holiday Sunday episode insured the Game of Thrones season finale wasn’t the only place to watch some fire-breathing action.

Following on from last week, there was increased signs that newbies Tej Lalvani and Jenny Campbell are already getting into the swing of things and ready to part with serious cash – should a business impress them enough.

With two start-ups successfully securing investment, we took a look at just how they managed to tempt the Dragons with their offerings.

Read on for business lessons from the show…

Dragons’ Den success story: Huxley Hound

Founders: Mike and Zena Dean
Concept: The “world’s first” range of fully traceable, organic vegetable treats for dogs.
Investment sought: £50,000 in exchange for 5% equity
Investment received: £50,000 for 15% from Jenny Campbell which was accepted.

The winning pitch

Entering the Den with a mantra of “go big or go home”, husband and wife team Mike and Zena Dean were really hoping they wouldn’t make a dog’s dinner of their pitch the dragons.

Selling their home and telling their children they were going on a “exciting journey” for three years, the couple’s dog food brand was launched just last January.

Its Better Than Raw dog treats range are nutritionally-rich, vegetable snacks for dogs – which come in a variety of flavours. Mike, who spent 20 years as a headhunter working for banks and management consultancy firms, was quick to outline that while dogs can’t normally absorb nutrients from raw vegetables,

Operating out of a industrial unit in Surrey, the start-up had already secured a trial listing with Fetch, Ocado’s pet store and physically make the product themselves.

Company finances

  • Funded through sale of family home
  • Started with a loss of £150,000
  • Turnover under £8,000 to date (only launched in January and have yet to file full set of accounts)

What the Dragons had to say:

Tej Lalvani: “I like the space. I think it’s interesting, it’s a growing market. Funny enough, we just launched a range of vitamins for dogs, and dog owners are definitely finding a lot of interest investing in snacks and products.

“When you guys walked in, I thought it was a good product and something that works but the £1m valuation is huge. I feel that £50,000 isn’t enough and you’ll need more money and in year two I’ll be putting in another £50,000 and year three. However, I think it’s something I might be able to tag onto my nutritional supplements and get you distribution.” 

Jenny Campbell: “I was at Crufts this year, as I am every year, so I’m pretty well into my dogs. You’re right, there is a massive market in pets and dogs and cats and so on. Treats were everywhere at Crufts.

“I think the journey is a real credit to you, but I also see how when you get the branding right, the story around brands, people buy that and people do like to pamper their pooches. So I do think there is mileage in it. It’s very hard, but every story is different.” 

Peter Jones: “I really do like your branding, I think it says what it is.”

Deborah Meaden: “I’m not sure I do like the branding. Doesn’t say its dog treats for a start. I think the thing you’re selling is the fact you’re selling this is because its more digestible, where do you tell me that?” This is a totally missed [opportunity], it doesn’t even say its a treat.

“I’ve been exactly in this space, I’m not in it now so I’ve no conflict of interest, I invested in a business here in the Den that absolutely concentrated on treats – boy is this a hard market. There is so much competition in the space you’re looking for. It takes a lot of money to get there and be a success story.”

Touker Suleyman: “You’ve got a valuation of £1m, you’ve got a turn rate of £8,000, so you must have a pretty good idea what you’ll turn over next month. Where’s that business gonna come from?

“You come in here saying its ‘small beer’, but you’re coming in here with a £1m valuation.

“You’re telling me that today I’m going to value it at £1m, so in five years’ time it might come to that, how on earth did you get a £1m valuation? Crazy.” 

Dragons’ Den success story: Natural Nutrients

Founders: Liam Sheriff and Craig Newbigin
Concept: Natural supplements for people who use the gym
Investment sought: £100,000 in exchange for 10% equity
Investment received: £50,000 for 17.5% from both Peter Jones and Tej Lalvani.

The winning pitch

Trying to work their way into the crowded nutritional market, Liam Sheriff and Craig Newbigin  and their supplements business Natural Nutrients entered the Den offering “100 transparency” for hardcore gym bunnies and Joe publics alike.

Selling the likes of protein popcorn, chocolate faba beans and whey protein powder, the duo have received interest from Europe’s largest health retailer to launch their products in 270 stores., while their latest round of investment allowed them to pitch to Holland & Barrett while touring at trade shows.

Must of the discussion centered around a £125,000 convertible investment loan taken out by the business in its first year. A “proof of concept” loan provided by the European Union and the government, Natural Nutrients will be expected to negotiate equity shareholding or re-pay the loan in under two years.

Company finances

  • Year one: Took out a £125,000 convertible investment loan
  • Last year: Turnover of £71,000, gross profit of £26,500 with a loss of £64,000
  • Next year: Forecasting a profit of £36,500

What the Dragons had to say:

Touker Suleyman: “You’ve got a margin of £2.50? I don’t think you’re going to make a profit and that’s because your margin is so bad. I’ve never seen a margin like this, ever. 

“Based on today’s conversation, is this business worth £1m? Honestly, put your hand on your heart, and say ‘is this business worth £1m?’ You have no money to put where your mouth is. That’s your problem. This is not a business that says to me without an investment today it will survive.”

Peter Jones: “The terms, they’ve been pretty tough on you. £125,000, 0% interest. You think ‘that’s great’ and all of sudden it goes ‘awh, redemption premium £100,000 or 80% of the loan. That’s a 40% interest rate.

“You’re genuinely really up against it with this agreement. This agreement is actually the reason why I’m going to make you an offer. Because I don’t like things like this and its incentivised me enough to do something about it ” 

Jenny Campbell: “I’ve been in that situation where you felt like that’s been the last place to go to take the money. I understand why that happens, with my banking background I do absolutely think you would go back to the negotiating table. Because either it’ll be a case of you lose the whole lot or come to a sensible solution.”

“I like what I see here, and I like what I see here in you too as well.”

Deborah Meaden: “I actually get the business side of this, somebody has to break a market, and all credit to the person brave enough to say ‘I’m going for it’, and I think the market is moving towards you. “

For more Dragons’ Den success stories, as well as stories on what happened to businesses who failed to win over the Dragons, click here.

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