Dragons’ Den: Series 15, Episode 3
From leather bags to DIY knitting kits, Startups’ examines how this week’s successful start-ups dodged the Dragons’ fire and sealed investment…
In the third episode of Series 15, the Dragons were primed to do business (or battle) as usual with probing questions and unforgiving appraisals.
Newcomers Tej Lalvani and Jenny Campbell continued to settle in with Lalvani sealing his third joint deal of the series, and Campbell making, then subsequently withdrawing, a large offer during a tension-filled pitch.
This week two entrepreneurs – both online retail offerings – coaxed the Dragons to invest with savvy negotiating and ambitious plans.
Read on to find out how the two start-ups impressed the Dragons and the business lessons you can learn…
Dragons’ Den success story: Temporary Forevers
Founder: Alex Buzaianu
Concept: Versatile leather bags designed to carry laptops, gadgets and photography equipment
Investment sought: £90,000 for 7% equity
Investment received: Following offers from Peter Jones and Jenny Campbell, the latter withdrew and Buzaianu accepted Jones’ offer of £90,000 for 35%, dropping to 25% once targets have been hit.
The winning pitch
In a nail-biting opener to the episode, Bucharest-born Buzaianu pitched his brand of luxury leather convertible rucksacks and briefcases and his long-term goal of making them available across Europe, the US and Asia.
Retailing the bags at £245 each (a price which Touker Suleyman condemned as too expensive but Lalvani thought reasonable), Buzaianu revealed that he had already sold £140,000 worth of products in the past year through a Kickstarter crowdfunding campaign. This was in addition to approximately £25,000 in online sales.
While the Dragons unanimously felt that Buzaianu’s £1.3m company valuiaiton was hugely unrealistic, Jones and Campbell were won over by the entrepreneur – whose stylish bags offered functionalities not usually found in similar leather products.
The two offers on the table weren't to last long though as Campbell withdrew her offer after Buzaianu committed a Den faux pas by focusing solely on negotiating with Jones; whom it was clear was his preferred investor.
Culminating in a tense negotiation, Buzaianu headed home with investment in the bag for Temporary Forevers.
- The company launched its products in December 2015 after a Kickstarter campaign which raised £136,000.
- A second Kickstarter campaign had brought in total revenues of £330,000 over the 15 months prior to the pitch.
- Buzaianu said his business had made approximately £65,000 profit so far.
What the Dragons had to say:
Deborah Meaden: “I feel slightly conflicted. I’ve got a business that makes very beautiful leather bags. In thinking what I can add to a business, which is a voice and the marketing, I just think it adds confusion.”
Touker Suleyman: “I know this area very well. Your product’s over-priced for what it is, I think the quality is mediocre at this price range. You’re going to struggle and struggle big, and I’m not going to invest in you for that reason – I’m out.”
Tej Lalvani: “You’ve done well and you’ve come up with a good product, high quality. But you’ve got the big players – the luggage manufacturers – who are all getting into the space, into backpacks. So I think you can spend a lot of money and waste a lot of time going to retail. I’m not going to be investing today, I’m afraid I’m out.”
Jenny Campbell: “I like it actually. It’s a lovely, lovely product. I think you’re very very persuasive.”
Peter Jones: “You're a very investable individual.
“I can see a big opportunity – if I was to help you put this into Jessops [one of Jones' investee companies] overnight, not only would we prove Touker wrong, we’d prove Tej wrong as well because he said you wouldn’t get into retail; in fact you could get into retail in the next two minutes.”
Dragons’ Den success story: The Wool Couture Company
Founder: Claire Gelder
Concept: Online retailer of large yarn, DIY wool crafting kits and handmade woollen products
Investment sought: £50,000 for 10% equity
Investment received: £50,000 for 30% equity, split equally between Tej Lalvani and Touker Suleyman
The winning pitch
Capitalising on a resurgence of knitting and crocheting, The Wool Couture Company retails large yarn, DIY instruction kits and readymade woollen products online.
Having suffered with depression since the age of 18, Yorkshire-based Gelder spoke highly of the ability of handicrafts to reduce stress and relieve feelings of depression.
Prior to the pitch, Gelder’s business had been trading for 18 months through Etsy, Notonthehighstreet.com and its own website, selling more than 13,000 units and making a total turnover of over £500,000. According to Gelder, high-profile publications such as Vogue and The New York Times have asked to review her handmade products.
Gelder showed a competitive streak by decrying her main competitor’s largest yarn size as her business’ smallest, and stating that her start-up differentiates itself by offering DIY projects that can be completed in a matter of hours.
With a solid expansion plan in place, Gelder sought investment that would help drive brand awareness, grow her business in the US and expand into China.
- Year one: £140,000 turnover
- Year two: £370,000 turnover with a gross profit margin of 35%
What the Dragons had to say:
Deborah Meaden: “I think you’ve done a fantastic job. I can see exactly the market that you’re going for. I do worry about the longevity of it, and I am a little bit torn, because I’m not sure and I do worry about the size of the market. I’m going to come down the side of I’m not going to invest by saying I’m out.”
Peter Jones: “I admire what you’ve done; your story’s lovely. The big concern I have is really the actual size of the market.
“I would imagine once you’ve done one or two, it could get a bit boring. [On Gleder’s repeat business rate of 20%] That’s low, that’s low on such a thing such as knitting. I’m not overly convinced. so I’m going to say that I’m out.”
Tej Lalvani: “Marketing is important and I can see the potential although it’s niche. My company does a lot of marketing, we’re the largest advertisers in the industry, so I’m actually going to make you an offer. But I’d like to have another Dragon on board who understands the industry a bit more.”
Jenny Campbell: “Claire, I believe that you can make this into a bigger business, definitely. I could be really tempted to make you a 50% offer, but I actually think I’m going to leave it to the ones who can, I believe, add most value to where you’re going, and say I’m out.”
Touker Suleyman: “I love it! I believe I’m the one Dragon that can take you to where you want to go. I could help you with creating a US website and localising it, I can add new products, I can do it all for 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.