Dragon’s Den biggest investment fails: What you need to know

The hit BBC TV show Dragon’s Den allows entrepreneurs and business owners to pitch their ideas to a panel of investors (AKA “dragons”) in hopes of securing investment capital. 

It all comes down to their presentation – the clarity of their pitch, the strength of their business plan and their ability to demonstrate both market potential and a path to profitability.

But while a successful pitch is a huge win for contestants, sometimes these investments just don’t turn out as expected and can fall through quickly – showing that even seasoned experts can get it wrong.

These are notable cases of Dragon’s Den investments that failed.

Dragon’s Den investment flops

1. Hamfatter

Investor(s): Peter Jones

Business: Hamfatter is a Cambridge-based pop and rock band, who appeared on the show in 2008 to seek an investment of £75,000 to fund their album and marketing efforts.

Outcome: Although Peter Jones invested in the band, the deal didn’t result in a significant return. Their new single “The Girl I Love” entered at 71 on the UK Singles Chart in 2008, though managed to reach number 3 on the UK indie singles chart. The band also faced criticism for the way it raised funds outside the record label system, with negative comments from New Musical Express (NME) and The Guardian. 

While it appears Hamfatter are still together, the band hasn’t released a full album since 2011 and their latest release was a three-piece EP in 2019. Hamfatter songs also don’t seem to be available to stream on Spotify.

Lesson: Hamfatter’s story illustrates the challenges and risks that come with investing in creative ventures, particularly in the music industry. 

Unlike traditional businesses, where returns can often be projected based on more tangible metrics, such as sales forecasting or target market research, the success of a band relies heavily on artistic appeal, audience reception and market trends – something which can be highly unpredictable and much more difficult to achieve. 

2. Breathometer

Investor(s): Mark Cuban, Kevin O’Leary, Lori Greiner, Robert Herjavec, Daymond John

Business: Breathometer was a smartphone breathalyser designed to measure blood alcohol levels (BAC). Founder Charles Michael Yim appeared on the US version of the show (known as “Shark Tank”), seeking an investment of $250,000 for a 10% equity stake. The company was the first to receive investments from all five sharks.

Outcome: The company faced major setbacks due to legal issues and problems with product accuracy, which led to financial losses and a significant blow to its reputation.

The Federal Trade Commission (FTC) filed a complaint against Breathometer in 2017, alleging that it had misled customers about the product’s ability to measure BAC levels. As a result, the FTC required the company to settle the charges, which included shutting down the app and offering full refunds. 

Mark Cuban later told CNBC that Breathometer was the worst investment deal he’d ever made on the TV show, losing around $1 million altogether. While Cuban initially thought it was a “great product”, he also criticised Yin for spending time travelling around the world instead of working. Following the FTC’s shutdown of Breathometer, Cuban said it was his “biggest beating”.

Lesson: Breathometer’s downfall is a valuable lesson on the importance of product reliability, regulatory compliance and the appropriate leadership style in the startup world. 

Despite receiving substantial investment, the company faltered due to not being able to deliver an accurate and reliable product, resulting in serious safety concerns. This can also teach businesses that simply having strong investors isn’t enough to guarantee success, as entrepreneurs must ensure that their products meet health and safety regulations, particularly when dealing with health-related devices. 

Moreover, strong leadership and a company culture that focuses on quality, integrity and compliance are essential for maintaining high standards and facing challenges. Both help to ensure the entire team is committed to delivering reliable products and adhering to regulations, which are critical for building trust with customers and achieving sustainable success.

3. Rugged Interactive

Investor(s): Peter Jones and Deborah Meaden

Business: Rugged Interactive specialises in designing and manufacturing interactive activity equipment. Founded by Simon Heap in 2009, the business was pitched to Dragon’s Den, with demonstrations on how its equipment could be used in various settings, such as gyms, schools and rehabilitation centres.

Outcome: Rugged Interactive successfully secured £100,000 from the dragons, giving them a 30% stake in the business. However, just a few weeks later, Heap backed out of the deal, claiming that neither Jones nor Meaden contacted him again. Heap told The Sun that they “never gave a hint about how it was going to work”. 

He also added that the Dragon’s Den TV set is merely a studio set and isn’t how it appears on TV. He described that the pitch room wasn’t a warehouse, there was no ceiling and behind the windows was “a painted landscape and one side of the walls is missing for the camera.”

Fortunately, Rugged Interactive still seems to be going strong and continues to grow in the competitive fitness and wellness market. 

Lesson: Simon Heap’s experience demonstrates that not all deals come to fruition, so entrepreneurs must be prepared for what happens after. A robust business continuity plan can ensure a company continues to grow and operate even if an expected investment falls through, detailing strategies for maintaining momentum and securing alternative funding.

Despite securing a good investment from Jones and Meaden, the lack of follow-up and clear communication led to Heap backing out of the agreement. This situation emphasises the importance of having a clear understanding of the terms and expectations of any investment deal and maintaining open lines of communication between founders and investors.

All in all, if you’re able to secure investment in Dragon’s Den, it’s just the beginning of your company’s journey. While it can give you crucial financial backing and exposure, it doesn’t always guarantee long term success. 

These cases remind us that even with strong investor support, businesses still need to overcome different obstacles and remain vigilant to achieve sustained growth and success.

Read about Startups 100 founder Amelia Christie-Miller’s experience on Dragon’s Den here.