Episode 1 Dragons' Den

These are the Dragons,

five of Britain's wealthiest and most enterprising business leaders.

Over the next 12 weeks, they'll make or break the dreams of dozens of budding entrepreneurs.

What investigation have you done to justify the most ridiculous, ludicrous, insane valuation?

Oh, for goodness' sake! You're off the wall!

-I don't want to know percentages. Real pounds, shillings and pence.

-She said...

Oh, my goodness gracious me!

I absolutely get this product, so I'm going to make you an offer.

The multi-millionaire investors have each built up their fortunes from scratch.

Retail magnate Theo Paphitis.

Hotel and health club owner Duncan Bannatyne.

Leisure industry expert Deborah Meaden.

Logistics queen Hilary Devey.

And telecoms giant Peter Jones.

The Dragons have the credentials, the contacts, the commitment and the cash ready to invest,

but only in the right business.

Will any of these hopeful entrepreneurs walk away with their money?

Welcome back. Tonight we reopen the doors to the Den

where our hopeful entrepreneurs, all fuelled with business ambition and driven by a need for cash,

are poised to descend the stairs and pitch to our five multi-millionaire investors.

Economic times may be tough, but all I can say is

through bust and boom the Dragons have had one consistent aim -

to put their own money into the next big thing.

Our first entrepreneur is mother of three Bee London,

who has a tiny, tiny slice of the huge beauty market in the UK

and she wants the Dragons' help to make that slice a little larger.

-Do I start talking?

-Yep!

-Yes! It's a good idea!

Sorry.

Em, yes...

My name's Bee and I'm looking for £85,000

for 10% of my company, Weave Got Style In-store. What we do is hair extensions.

So we're going to do a bit of a demo now so you can have a look at what we do.

Right. What we have in-store are hair extension bars.

So...the clients have a similar process to this.

These two guys are going to do what we do normally in-store and I'll talk to you about the company.

Weave Got Style first established in 2008. I don't know if you've watched the show The Apprentice.

I saw a bit of that and I saw that they went into shopping centres and trial marketed their products.

So I thought it would be a good idea to do that.

And, em, it took off very well.

We now have three bars

and I'm hoping to open two more bars and I would like your investment in helping me do this.

If you have any questions, please ask now. Thank you.

A somewhat disorderly pitch from Bee London from North London.

She needs £85,000 to roll out her in-store hairstyling concept

and she's putting up a 10% stake in return.

-Thank you.

-Hilary Devey is first to interrogate the enthusiastic entrepreneur.

Bee, is there anybody else doing this? I've seen them where they actually glue them in.

That's where I saw the gap in the market.

Generally, people were gluing them in and it was taking 5-6 hours.

With our method, we do a full head in an hour.

You know, what we do is we cut it in, we style it in.

-My ones are in. You can pull them, tug them.

-You've got them in now?

Yeah, I've got them in. The plait and the threading gives you a bit of oomph.

-Where do you plan on going with the business?

-Hair extensions were for the rich and the famous.

The vision I had was let's bring it into the department stores, but also maybe places like New Look,

Topshop. You know, we can use three different colours.

People with blonde hair will say, "I want it a bit warmer underneath. I don't want to be so blonde..."

-Bee.

-Sorry.

-You've just painted a beautiful picture,

but let's concentrate on the business. Which one has been open the longest?

My original one that I opened is in Bluewater Shopping Centre.

Tell me what the turnover was in the last year.

The turnover on that was £365,000 with a £55,000 profit.

-And what about the other ones?

-I then opened House of Fraser in Lakeside.

That one took £123,000 with £26,000 profit.

And my one that I've opened most recently in Trafford Centre Selfridge's

took £240,000 in 10 months.

By revealing ambitious plans and a flourishing revenue stream,

Bee looks to have quickly relaxed into Den questioning. Peter Jones is keen to drill down further.

Bee...

-Yes.

-Manchester turned over £240,000.

-In 10 months, yeah.

-What was the profit for there?

Oh, I don't know offhand.

-The profit... We... I don't know what the profit is.

-OK.

-So between all three of them, you're turning over about three-quarters of a million pounds.

-Yes.

-And you could be making close on £100,000 profit a year.

-Yeah.

Can I just take you through so I get a proper breakdown of each area?

What's your staff costs at Lakeside?

Staff costs at Lakeside...

I don't know that offhand.

OK. You make what kind of margin, gross?

The margin, gross, is I think about...

75%.

Bee...are you guessing?

If I want extensions, how much would it cost me?

-£240.

-How much would the raw material cost?

About £100.

So if you buy your hair for £100 and you double it, what figure do you get?

-200.

-Good. OK. On top of that 200, you've got to add VAT. What does it come to?

-240.

-Which is what you sell for.

-Yes.

-Right.

What percentage is 100 of 200?

-50%.

-Excellent.

Now that's your margin.

Yeah.

But we don't... Like, I buy the hair for 100, but we don't do one head, we'll do two heads out of it. So...

Uh...!

-Uh!

-Hence why she gets the 75%.

-No, no, that's nonsense.

-So it's £50.

-75%. It's £50.

-Peter, I can only go by what she says. I'm not going to pretend I know her business.

-She said that.

-No, she didn't.

-She did. She said 75% was her gross margin. 75% of the numbers is 50 quid cost.

-Peter, she said the head of hair cost £100.

-Yes.

-That's all I want.

-I don't want to know percentages. Real pounds, shillings and pence.

-But she said...

Can you settle down? This is about Bee, not about you two.

A contrite looking Bee can only watch as the lack of clarity in her numbers

causes tempers to flare. Can she now find solace from an unlikely corner of the Den?

Bee, let's just forget about numbers for a second. OK? Tell me about you.

Em...

I built myself up from the ground.

-Take a deep breath.

-Yeah.

-Take your time.

Em...

I basically started off, em...

..on a market stall.

And I found whatever I sold sold quite well,

so I used my personality to sell the products

and then I went to a busy area with lots of ladies shopping

and it took me seven months before I had a shop and that's when I came up with doing hairdressing.

Em, and I have...

I really want people to see my vision

and, em, I've worked very, very hard for what I have

and I don't want to, em, ruin my chances.

A heartfelt exchange.

Unable to rein in her emotions, her entrepreneurial spirit is clear.

Is that enough for Deborah Meaden to give her a second chance?

So you've got something and you're passionate about it.

Your numbers are all over the place, but sometimes people just instinctively make money.

The trouble is turnover is a good start, but it doesn't mean anything until it drops through to profit.

-Yes.

-So...what's your balance sheet?

-The balance sheet. What do you mean by the balance sheet?

-You don't know what the balance sheet...?

-I have seen them, the balance sheets.

Do you know how much stock is going into each store?

-No. I just basically...

-Do you know how much wages go into each store?

-No, I don't,

to be honest.

Bee...

-Yes, sorry?

-You're not managing the business, are you?

OK, I've made my mind up. You have started something and accidentally made some money out of it.

And you worry me that you could accidentally lose an awful lot.

-Yeah, I understand where you're coming from.

-I'm not coming from anywhere.

I'm out.

A first blow for the young entrepreneur as an exasperated Deborah Meaden walks away.

Will Theo Paphitis be more forgiving?

Bee, there is no question in my mind that you are driven, you're passionate,

you want to get somewhere, but there's a "but".

Today

you were winging it. Purely winging it.

-True?

-Yes, I agree. Yeah.

That's never a good tactic in the Den.

I'm out.

The problem is, Bee, that if you don't know the individual wages and costs of each outlet,

you won't know if they're all making a profit. You need to understand the individual outlets

before you open any more. I think you have a lot of work to do in understanding that.

I'm out.

Bee fails to convince two more Dragons and her investment dreams are fading fast.

And now Peter Jones looks to have made up his mind, too.

You've done incredibly well. I think you have built a very successful business,

but I think you have entered a marketplace that is easily replicated,

so I'm not going to invest in you today for that reason, Bee. I'm out.

I think your numbers are all over the place.

I think you're commercially unaware.

I can forgive you.

I think you've done remarkably well.

I'm going to make you an offer.

I'll offer you the full 85.

But not for 10%.

It's not worth my while.

I would like

40%.

I'm a bit terrified of the 40% because that's a huge percentage.

-Would you consider going down to 30?

-No.

Because you need so much time.

-What about if I...

-Bee, together we'll build a very successful company.

Not necessarily in the same model that it's in now, but a business model to go forward with.

OK, I accept your offer.

Bee's done it. Amongst the confusion and the emotion of her pitch,

Hilary Devey recognised her potential. However, her support comes at a high price.

The Dragons never know who will walk down the stairs into the Den or what they will reveal.

Husband and wife team Colin and Yelena Goddard hope to secure £50,000 to help develop their answer

-to a common holiday problem.

-Hello. It looks like you're struggling to get comfortable.

Have you tried the new SmartMat?

It's revolutionary comfort for all your travel and leisure needs.

And look at this - SmartMat inflates itself in just under a minute.

-RUSSIAN ACCENT:

-SmartMat is so versatile you can use it anywhere.

By the pool, on the beach, on picnics, and it even floats on the water.

It wasn't long before Duncan Bannatyne spotted a fundamental flaw.

-I'm stunned to hear you say there is no other similar product on the market.

-Yep.

-Because I just spent a week sleeping on one.

-Did it have the detachable towel?

No, it didn't have the detachable towel. Same product as that.

-Yep.

-So why are you saying there's nothing similar?

-Cos it doesn't come with the towel.

Oh, my goodness gracious me!

A jolly atmosphere, perhaps, but it soon came down to the bottom line.

-How much stock have you got?

-500 units.

-Landed cost?

-£11.94.

-Wholesale?

-Between £14.50 and £18.

You're not going to make me rich or make yourself rich on this. That's the problem.

-It's not new, it's not difficult to copy, there's nothing unique in it that you own.

-Apart from that...

Apart from the fact that you're lovely, I'm not going to invest.

However, it wasn't all bad news for the first-time entrepreneurs.

Unfortunately, I'm out, but I love that jacket.

If you were a little bit slimmer, I might offer to buy it from you.

A few shoulder pads. I love it.

Nothing causes more argument in the Den than the values entrepreneurs put on their businesses.

So is our next entrepreneur, Adam Ewart from County Down, confident, courageous

or a bit reckless? He's going into the Den putting a £2 million price tag on his company.

Hello, Dragons. My name's Adam Ewart.

I'm here today to offer you 5% equity in return for an investment of £100,000.

Sendmybag was founded after my girlfriend was forced to pay over £60 excess baggage

travelling from Heathrow to Belfast.

On returning home, we looked online for a service that we could use

to send her suitcases to university the following term. One didn't exist

so the next morning I spoke to the national couriers and by lunchtime I'd set up a service

where I could collect and deliver a 30kg suitcase anywhere in the UK for £22.

The following term over 100 students used Sendmybag to travel to university.

Over the next few years, the business has netted me in excess of £100,000 profit,

but this is where it starts to get more interesting.

In the middle of last year customers started asking us for international services.

Airline excess baggage fees have been growing almost exponentially.

Travelling with luggage can now represent a real financial pain.

The solution is an affordable international luggage service.

And that service is Sendmybag.

I'm happy to take any questions.

A self-assured pitch from 27-year-old Adam Ewart.

His alternative to hefty excess baggage charges is a web business that couriers your suitcases

door to door instead. He needs £100,000 investment and is prepared to part

with 5% in return. First to investigate the opportunity on offer is Duncan Bannatyne.

Thank you, Adam. Which airlines charge extra for extra luggage?

The low-cost airlines with their 170 million people every year,

-they carry them around Europe...

-Yeah, the difference is, though, that going to America

the low-cost airlines don't go there so two cases are usually included.

-I'm just wondering how limited you are.

-There's 500,000 international students studying

in the UK today. They all have to travel home

and they all have to travel with more than one or two bags.

I also have people who wanted the convenience aspect, not so much saving lots of money.

-OK. How many years have you been doing this?

-I started about 4½ years ago.

And it is growing rapidly.

So far this year we are up 250%.

-So what's your projected turnover?

-We're going to finish this year at £200,000.

So net profit is going to be £60,000.

-Will you have taken a wage out of that?

-I won't have.

-Right, OK.

So you've got a company projected to make a maximum of £60,000,

without you taking a wage, and you've valued the company at two million quid.

I have, yes.

Low profits and high valuations are unlikely to endear you to Dragon investors,

but a confident Adam appears unfazed by their reaction.

How will he cope under the scrutiny of Theo Paphitis?

Adam, you're going to have to show me why you're standing there

and valuing what you've got at a couple of million quid.

The two million valuation is from real reasons. I've looked at other tech start-up businesses.

Are they positive cash flow? Is their market growing like ours?

No.

Whichever book told you that's how you value that business,

did they forget to put the bit in "and you have a business that anyone can copy

"so if it's really successful, someone will nick your lunch"?

What makes you so special that nobody else can duplicate this?

This has started out of a problem. That's one advantage.

-I didn't try to force this...

-No, what's different about you?

We provide services to ensure that we can get your stuff out of the country to your destination...

-Adam, just tell us. What makes you special?

-Me. There we go. I've said it.

Not to be arrogant, me. Any business is going to be strategy and implementing that strategy.

I have taken the decision that this can be massive.

My plan is to get this business to a position in two years' time where we can take it globally.

Adam may be standing his ground admirably,

but the words look wasted on an irritated Peter Jones.

Adam, you are valuing your business

-at ten times revenue projections.

-Well, we have a brand. Our brand is...

-You don't have a brand!

You turn over diddly squat! I could set up sendmyluggage.com and invest in it.

I own that, too. You can't. You're giving me a hard time...

What?! You value your business on projections at ten times revenue and you don't expect a hard time?

-Well...

-What investigation have you done to justify the most ridiculous, ludicrous, stupid,

insane valuation?

I have... I have one investor already.

A software entrepreneur. He took a company from 500 grand turnover and sold it for over 200 million.

-What did they give you, in money terms?

-They're investing £100,000.

-And at what percentage?

-I want to be... They're taking between 7% and 10%.

-So they haven't done it yet.

-No.

-OK. So can you just explain to me

why this investor brings twice as much value as a Dragon?

He doesn't bring twice as much value as a Dragon.

The Dragons, all of you, bring a lot and I wouldn't be standing here...

That's a description of why he doesn't bring so much value

and you asked for a description of why he does bring twice as much. Adam, you need to be succinct.

-What's he got?

-He's brought money to the table and shown interest...

-You're asking us to do the same.

When I first met him, I was going to finance it myself. I need 150 grand, I'm going to do it all myself...

-Adam, answer the question.

-He doesn't bring double the value, but what he does bring

is that it's an investor there and the business has moved on.

Adam, you have just NOT explained to me why the investor who has NOT yet put £100,000 in

is still going to get twice as good a deal as you're offering here.

I can't invest.

I'm out.

Ah.

Frankly, it's just disappointing and insulting.

I'm out.

A double blow for the previously confident Adam as two Dragons refuse to do business with him.

Will logistics expert Hilary Devey offer the young entrepreneur any respite?

First of all, how many losses have you had? How many non-arrivals?

-We have had one non-arrival in the last 4½ years.

-So you deal with recognised courier networks.

You use their intellectual property and their IP to track it.

-In the UK we work with Parcelforce and, in America, FedEx.

-Right.

So you've got to have some kind of software to connect to their IT

-to track them cases. How are you going to do that?

-We're integrating...

Oh, for goodness' sake! Why reinvent the wheel? Do you know I run a courier network?

-I certainly know.

-So what's to stop me putting a line on my website

saying, "We can collect your luggage"? They can dial online and see what time it will arrive

-and what road it's on.

-Yeah. That's...

What you've got to do is dial in to FedEx's consignment system.

So what you're doing is duplicating the work already being done anyway.

I'm more than happy for a large logistics company to step in, perhaps invest in us strategically.

Why on earth would any logistics company want to do that when they could do it themselves anyway?

I think you're talking rubbish. And to come in here asking for 100K

for 5% is...is... You're off the wall!

I'm out!

An incensed Hilary Devey leaves Adam in no doubt about her position

and his Den ordeal is not yet over.

You do look credible, you talk well, but every time you've been challenged

-you've never put up.

-I feel like I've failed in getting across my point

and given the wrong impression. I understand investors need to get their money back.

But the problem is the minute everybody thinks this is a million-pound business,

every kid in every university will do the same.

And they already try.

Adam...

-I'm out.

-Thank you, though.

Adam, how negotiable is the 5%?

-After all...

-How negotiable is the 5%, Adam?

-My 5% is a starting point.

Adam, if you want an investment of £100,000 off me, you need to tell me the highest percentage you'd give.

The highest percentage equity that I can go to...

..is 7%.

The problem is it's never going to be worth £100,000 for 7%.

I'm out.

A humbling experience for Adam.

High valuation equals high risk in the Den, a risk that didn't pay off for him.

We're clearly not a big, big brand, but I feel we have a lot more potential than other businesses.

And I was hoping that I could have communicated that a little bit more,

but I didn't really get an opportunity to, I think because of my valuation.

Common sense says that getting Dragons to participate in your pitch would engage them more in your idea.

That's what partners Harriet Thomas and Sue Newman thought when they asked for a £50,000 investment.

I was a singer and wanted to pass on my passion for music to my children,

but I couldn't find anything that got my toes tapping.

-So we decided to work together...

-And soon we started running music workshops

-around southwest London.

-Do you want to listen to the song?

-Just join in.

The more enthusiasm, the more the children will really learn from the activities.

# Brussels sprouts, Brussels sprouts Hands up who likes Brussels sprouts

# Yummy, yummy, yummy Put it in my tummy I like Brussels sprouts! #

Whilst some of the Dragons got to grips with the singing class,

Peter Jones was less enthusiastic.

I've been given a rhyme and two sticks.

-Why is this a business?

-We have 100 original songs.

-Original songs? You could have apple pie!

-#

-Apple pie, apple pie...

-# Exactly.

"Yummy, yummy, yummy, in my tummy" is not an IP that you can claim for your business.

-Anybody can duplicate this.

-But he did that with my melody, so I'd have to sue him for that.

What?!

In the end, the Dragons needed more than dedication alone to invest.

You don't seem to understand your USP.

It isn't the songs, Harriet.

It's you two that are driving this business forward. The trouble is I'm not convinced it's scalable

-and I don't believe it's a business. I'm out.

-Thank you.

-Good luck.

So far tonight, only one business has earned a Dragon investment.

-I accept your offer.

-To hear from Hilary Devey about why she invested in Bee,

press your red button at the end of the programme.

Personality can go a long way to opening doors in business, but it can't guarantee success.

Our next entrepreneur has plenty of personality. He's former boxer turned inventor Clay O'Shea.

So has he got the product to make a great business?

Hi, Dragons.

It's not real, I promise you.

Hi. My name's Clay O'Shea

and I'm here for a £50,000 investment for a 25% share

in my invention, AbsPak.

Dragons, I've not got the best business brain, but what I do feel is I'm a decent inventor

and I've come up with a really good idea. With my beautiful idea and your beautiful brains,

there's no reason why AbsPak can't become the best bit of kit in the UK, maybe even the world.

AbsPak is simple. It's so simple you wouldn't even know I've got it on.

So look, here you have a normal spine. This is quite impressive.

It's called a lumbar spine, that. The natural curve.

Most sit-ups are done with a flat back. That puts stress on your lumbar box spine.

It degenerates your lower discs and wears out your facet joints. AbsPak fits perfectly

into that curve.

So now I'll give you a demonstration of how not to do sit-ups.

How many times in the gym do you see the whole neck moving? That's not a sit-up, that's a neck-up!

"Ah! Me back's gone! Me neck's gone!"

So now look at this. I can sit and watch TV. The only thing moving

is my abs. There's loads of exercises.

It's just my abs. My neck's not moving, just my abs.

No chance...of any trouble.

Now once you do AbsPak, you'll never turn back. Please, help me.

A passionate plea ends this whirlwind pitch from Clay O'Shea.

He needs a £50,000 investment in his portable muscle-building device and is offering 25% of his company.

Theo Paphitis just looks bemused.

Em... OK, we all understand now what it does.

-What do you do?

-Em, well, I run a small gym over in Notting Hill.

-Do you make a living?

-Yeah, I keep it small, I don't advertise. You only get in if you know someone.

You know like Fight Club? You don't talk about Fight Club.

I've got a great life, no matter what. I feel privileged.

-Talk me through your history. How old are you?

-45.

-What have you been doing?

-I was a professional fighter.

-I used to be a pro boxer.

-To what age?

-I retired quite early. About 29.

I was managed by Mancini and Mickey Duff.

I was the second-best boxer in Great Britain.

I had over 100 fights and I came second in every one.

Charming the Dragons is a good start, but now Duncan Bannatyne wants to get down to business.

What does it cost to make an AbsPak?

-£3.25.

-OK. What would you sell it for?

-£19.99.

Apart from the fact that you can strap it on all the time,

what's the advantage of that against a rolled-up towel?

That's like between using a skateboard and a car.

If you're getting a towel, you've got to roll it up and after a few sit-ups it loses shape.

-This will never lose shape.

-Can you pass it to me?

-Yeah.

It fits all sizes.

-So what's in it?

-Foam.

-Foam.

-Foam rubber, yeah.

What patents have you got?

OK, there's no patent. All I've got is the trademark.

Sort of kills it, really.

-I don't agree. I know you'll say that anyone can copy it.

-Yeah.

But if you're telling me anyone can copy it, you're saying to me this is a decent product.

That's the way I see it. Secondly, what will you call it?

AbsBelt? That's already been taken by another company doing something different.

-AbsStrengthener. There's so many names.

-No.

AbsPak. Come on!

Clay's belief in his invention is clear, but is it misguided?

Deborah Meaden wants to know.

Clay, when it boils down to it, you have no protection on this,

so the only thing that you're really selling is the name.

You're asking for an investor to value this name

at £200,000.

It's a great name.

Clay, I know you're hanging off AbsPak because you do love it,

but, honestly, AbsBelt, lots of different variants.

I do think it's so easily copied and I can't see

-how you could make a lot of money out of this.

-Can I tell you who I'm talking to at the moment?

I'm in early talks with the MOD for the Army boys.

They have tons of stuff flown out to them. AbsPak goes on their kit,

I tell you what,

that in camouflage - mustard.

-Then... No, hear me out.

-Clay...

-Army boys. Can you imagine it? They can get down any time.

-Clay...

It's been a great experience, it's been good to meet you...

So you're out then, yeah?

Unfortunately, I'm going to have to say I'm out.

It's a first taste of reality for Clay as he loses his first Dragon.

And it doesn't look like Theo Paphitis is about to let him off the hook either.

If this got on the shelves, I'd buy one.

As you say, just strap it on, no messing around, not doing my neck in, it's probably good.

The problem is how do you make money from it?

-Sell lots of them. I think that we could sell 20 million of them worldwide.

-Could we?

And Reebok wouldn't want to sell their version? And Adidas? And Nike sell their version?

The market, I don't have to tell you how big the market is. AbsPak is the original and the best.

AbsPak!

I hear what you're saying. The problem is I don't think you would sell enough of these

to get my £50,000 back.

And for that reason, Clay, keep fighting, but, unfortunately, I'm out.

Clay, you've done the classic entrepreneurial thing,

which is come up with a problem, come up with a solution. So far, textbook. Brilliant.

But it could be copied faster than we could physically get it onto the shelves.

-So I won't be investing, I'm afraid.

-Thank you.

-I'm out.

Two more Dragons out and Clay's confidence is ebbing away.

Duncan Bannatyne knows this market well. Has he seen something that his rivals have not?

Clay, we sometimes sell things like this in our health clubs,

but it would be a £5.99 product. It's not a £19.99 product.

But even if it was, you can't protect it, you know. There's no way you can protect it.

-So for that...

-Don't you think the market's big enough?

-No.

So, reluctantly, Clay,

-I'm sorry, but I'm out.

-Thanks for the opportunity.

I think you've heard it all. There's no point in reiterating it. There's just no investment opportunity here.

Yeah, I...

-I know and I can see how passionate...

-No, I appreciate...

-I've got to be honest with you.

I've got to tell you the truth. I think you've got to be a bit more innovative,

think of something else and come back next year.

So I'm out. But good luck.

It's hard to take,

but the cruel reality of it is

I'm hearing you. I've got to take that on the chin.

Cheers. Take care, God bless. It's been emotional.

Lessons learned, perhaps, but no cash. Clay leaves with nothing.

-What a great character. He's the kind of salesman you need in your company.

-Absolutely, yeah.

Others who tried and failed in the Den included Warrington chip shop owner Osman Gulum

who had a surprise in store for the Dragons.

Flower Fountain uses a blast of air to launch fresh petals and confetti into the atmosphere,

to make a celebratory moment.

These multi-millionaires are well-versed in spectacular finales.

I was just disappointed by the climax.

What made you want to do this? There must be a reason.

I start to watch Dragons' Den since 2007 and I wanted to come work with you guys

-and I started an idea...

-So it's our fault?!

-No. You make me invent this. I love you all.

Inspirational, maybe, but these hard-nosed inventors don't make decisions based on flattery alone.

-Which is the patentable step?

-The patent is the remote control.

-Have you got a patent or you've applied?

-Patent pending.

I'd be surprised if you get that.

I would try it in the garden of one of my hotels, but it would have to be a lot more spectacular.

-I can't invest in this. I'm out.

-Thank you very much for your time.

Mother and daughter Patricia Gruchy and Louise Villalon from Hampshire

hoped they'd spotted a trend worth a £45,000 investment.

Together we've formed a company Two Chickens And A House.

Chickens are very fashionable, as you know, and make lovely pets.

This bird-based business seemed lost on Hilary Devey.

-Surely it's cheaper to go and buy half a dozen eggs.

-People...

-That's not the point!

-Your own fresh eggs, straight from the chicken's bottom!

-Buy free range from Sainsbury's!

Fresh eggs, yes, but that wasn't the issue for Duncan Bannatyne.

You said chickens have become very fashionable "as you know".

That's the one piece of fashion that seems to have passed me by.

-People are going mad for chickens.

-I don't know anyone who's got chickens!

Yes, you do!

It was left to resident chicken expert Deborah Meaden to sum up the mood in the Den.

This is something a lot of people can make. This market has been pretty much saturated.

-So I won't be investing. I'm out.

-Thank you.

-What are the chickens called?

-Oh, well, Hilary and Deborah.

-Thanks for coming.

-Thank you, ladies.

The fast-paced worlds of fashion and technology are both notoriously hard to crack.

Combining the two, then, has got to be hard to crack squared.

It hasn't put our next entrepreneurs off - Lewis Blitz and James and Richard Gold, from North London.

Hi. I'm Lewis. These are my business partners, James and Richard.

We're here today to ask for £120,000 investment for 10% of our company.

About two years ago, I feel I spotted a gap in the market.

I'd just bought a new phone and wanted a cover to protect it and look good, too.

Everything I found was uninspiring and overpriced.

After speaking, we believed there was an opportunity to make tech product a little more exciting.

So we launched Skinnydip, a brand of accessories that merges fashion and technology.

Working with young, up-and-coming artists and fashion designers, we created a range of fun cases

-which we began supplying to high street fashion retailers.

-In 18 months' trading,

Skinnydip has turned over over £500,000 and has sold over 200,000 products.

Some of our most successful lines include beanie headphones, ear muff headphones and printed headphones.

We believe we're the only brand catering for the fashion-conscious consumer in high street retailers.

Thank you for listening to us and we hope that you jump in and Skinnydip with us.

A promising pitch from Lewis Blitz and his best friends, Richard and James Gold,

from Golders Green. In exchange for 10% of their burgeoning accessories business,

they want a £120,000 investment. It's an area Peter Jones knows well,

but it's not their product that's caught his attention.

-Hi, guys.

-Hi.

I was very intrigued because whilst you were doing your pitch, James was miming it.

Oh, no! Oh, no. My mum's going to kill me.

-Do you do that a lot?

-All day long! At speeches. I'll speak and he just...

It's so embarrassing. I'm quite good at learning stuff and I learnt the whole pitch

in case, for whatever reason, Lewis or Richard wouldn't remember it and I could stand in and do it.

-Perfect, perfect timing.

-Yeah.

-So where does Skinnydip come from?

-When we came up with the concept, we didn't know what the name was,

but we understood the ideals of it. To be fun, young, creative.

It took us a long time, but once we came up with the name, we all immediately knew.

If I was to say you need to change the brand to be successful, what would you say?

I think we're very proud of the brand. We have a lot of work to do,

but that's where the expertise we could get from working alongside one of you guys

can take the brand to the next level. We're not averse to change, but not to impact on our values.

As long as it doesn't change that, we'd welcome any of your suggestions.

James, can I say...? Well done.

Best answer in the Den for a very long time.

Compliments abound as the trio settle quickly into the Den,

but Hilary Devey is keen to find out if there's substance behind the smooth-talking graduates.

Now you've valued your company at £1.2 million.

-Yes.

-How do you derive that valuation?

-Em, we derive that valuation from our actual and future projections.

-Go on. Talk us through that.

2012, we estimate we're going to turn over £1 million. We think we'll make a net profit of £315,000.

And by 2014,

our estimated turnover is £3.3 million

with a net profit of £1.1 million.

-How certain and why?

-We've based our projections on our current customers.

We supply 13 major retailers in the country. Debenhams, Next, Republic, River Island...

-Harvey Nichols.

-Harvey Nichols. And we've just started to supply Tesco as well.

Mm.

Guys, how much do you owe in the business?

-We owe nothing.

-Do you have an overdraft?

-We don't.

-Do you have a bank account?! How have you funded this, then?

-We initially started with £45,000.

That was every penny we'd had from savings. That went into funding our first order.

-Every penny got reinvested.

-So where do you operate from now?

We found a warehouse in Wembley that was deserted. We cleaned the office out, we didn't have carpet...

-And how many staff do you employ?

-Not one. We do it all ourselves.

-That's it?

-Yeah.

The Dragons look enthralled by the trio, but they have yet to receive an offer of investment.

Now marketing expert Deborah Meaden wants to take a different tack.

So, guys, hi. I'm Deborah.

Who do you think, then, is your closest competitor?

It's going to sound a bit of a cliche answer, but we don't feel anyone is doing what we're doing.

There are loads of companies doing headphones, phone cases, but no one has packaged it under one brand

-and is supplying it to fashion retailers.

-So when you sell in, are you selling in the package?

-Or are people buying lines from you?

-It depends. Some retailers, Debenhams for instance,

M&Co, a few have actually bought display units from us.

River Island is a strange one. It's slowly growing with them

and now for this Christmas they're looking at doing a full product range.

-Do you know my background in this at all?

-We've done a bit of research.

You know I'm involved with a fashion house. It was all about clothing, but then we discovered headphones.

Now they're more than half of our business, so I absolutely get this product.

So I'm going to make you an offer.

You guys need to remain motivated.

-Yes.

-You still need the lion's share of the business.

So I'm going to offer you all of the money

and I will be seeking a shareholders' agreement

that gives me the rights as a 25% shareholder,

but...

-I want 20% of the business.

-That's a bit tactical, isn't it?

-PETER: A bit tactical.

Thank you very much for your offer. Thank you.

20%(!)

In a move designed to outmanoeuvre her rivals,

Deborah Meaden has devised a way of combining equal ownership with a more attractive equity offer.

Will Duncan Bannatyne choose to compete?

Em, gentlemen, I was going to make you an offer and then Deborah made you an offer for 20%.

-So although you guys are fantastic and I'd love to work with you...

-Thank you very much.

-..I'm out.

I think

I'd also struggle for 20%.

Deborah's made you an excellent offer.

I'm out.

Deborah Meaden's tactics look to be working.

She may have outfoxed two of her rival investors, but there are still two Dragons to declare.

-What are the things that you're not good at?

-Well, I think we all have strengths in different areas.

Me and James have known each other since we were 10. We're different characters, but work well together.

And Richard has always been a close friend. We focus on the creative side, while James is meticulous.

Between us, we cover all the areas.

If I could just add, I do think this market is incredibly tough. We don't shirk away from that.

We're more than determined to make this business successful.

Deborah's offered 20%,

which is annoying, actually.

I'm going to make you an offer.

The whole £120,000,

but I want 30% of the business.

However,

the minute I get my money back, I will drop down and become an equal partner with you.

-Thank you very much.

-Thank you.

Look... you three I could work with.

I think you're better than good.

Using my distribution network,

contacts, we could make so many things happen.

Em, I'll give you all the money.

For 25%.

- Thank you very much. - Thank you.

Do you mind if we just have a...?

It's decision time for the three entrepreneurs with three different equity offers

from three well-connected Dragons.

Are the trio now in need of a tactic of their own?

Em, we'd love to work with any of you, but could I ask what would you do for the brand?

That's...

That's quite a difficult one to answer until I know what you need.

Right.

I personally think that the brand isn't good enough.

Well, hold on a minute. You're nodding. Do you agree with that?

-I really think we'd have to sit down and discuss it in a lot more detail.

-Exactly.

It's easy to criticise. What Deborah said was meaningless to me, but I didn't criticise it.

-It's a hard question to ask.

-That's exactly what I said, Peter.

Theo and Peter, would you be prepared to come down to Deborah's 20%?

I'm going to need 25%.

I'm not sure that you're seeing

the bigger opportunity of what you are, potentially, minutes away from missing.

And it worries me a little bit.

- I'm sorry... - Thank you.

JAMES: Three offers.

Deborah's is the lowest percentage. Peter...

Theo, how much time can he give?

Em...we'd like to thank you all very much.

In an ideal world, we'd like to accept all of your offers.

We've had a long think about it. So, em...

I think, Peter, we'd like to accept your offer. Thank you, Deborah and Theo.

-Well done.

-Thank you.

Lewis, Richard and James have done it. It was a tense negotiation,

but they leave with a well-connected new business partner on board.

We've never made a harder decision.

-We wanted to take all three, but we wouldn't have a business!

-It was unbelievable.

You had to weigh up whether it was equity or what you got from that.

I think we made the right decision.

Well, it's been a remarkable first day back in the Den.

James, Richard and Lewis displayed a perfect mix of confidence and passion

that led to three Dragons competing to invest.

But what we saw was that their charm was of little use to them in the negotiations.

In the Den, deals are always based on cold, hard facts and numbers.

To get more insight into why the three friends went with Peter Jones' offer over his rivals,

just press the red button now. Goodbye.

-Next week in the Den:

-It's not just my foot that's itching. I'm getting frustrated.

I think it will drop off a cliff.

A complete and utter waste of time.

It beggars belief that you can't remember basic numbers.

-HILARY LAUGHS

-Is that fun, Peter?

Georgia!

So it's £100,000 for the hat?

You might get five offers.

Subtitles by Red Bee Media Ltd