Episode 3 Dragons' Den

These are the Dragons.

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

Over the coming weeks,

they'll make or break the dreams of dozens of budding entrepreneurs.

If I've been harsh

and you HAVE been listening then it's been a great exercise.

-It's absolutely stupid.

-I'm not going to waste my words any more.

You are entirely investable.

-DEBORAH:

-What is going on?

I've never, ever, ever seen... What have you done?

The multimillionaire 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,

queen of logistics 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 to Dragons' Den.

Entrepreneurs are optimistic by nature.

And those who come here are no exception.

They're all convinced their idea or invention can make them rich.

But the challenge, of course, is to persuade our five Dragons

to share that view and invest in their business.

A few who come here today will succeed but most can expect

to find their optimism taking a knock or two along the way.

It takes a good pitch, a great product

and a persuasive personality to convince the Dragons to invest.

Will our first entrepreneur have all three?

Hi, Dragons. My name is Andrew Hannon.

I'm here today, I'm looking for £50,000 investment.

Now, it's happened to all of us. You get a nice package through the post.

What happens? It comes through and it's all ripped.

I mean, just a quick show of hands, Dragons,

has it happened here to anyone?

Just a quick show of hands. Come on, don't be scared, Dragons.

Rrrarrgh!

Aaargh!

Rrraaarrrgh!

Rrarrgh!

Hello, my name is Andrew Hannon.

I'm here today asking for £50,000 in return for a 20% equity

of my company Thirteen Horror Ltd.

My business, as I've tried to show, is fear.

I make fear available for people

in the form of two interactive online experiences.

Experiences which started off as short stories

in two self-published books.

The first of these experiences is called The Magic.

It takes approximately five to ten minutes to complete

and it is terrifying.

The second experience is called The Dare.

It's done as a group because it's too scary to try by yourself.

It takes about one hour to complete.

It'll scare your socks off.

Both experiences have been extremely well received.

They have topped the iTunes horror chart in England,

America, Canada, Australia and even made it

into the top 100 charts for fiction in America and the UK.

I'm happy to take questions,

and apologies for the unorthodox beginning but I thought

I'd try something a bit different to, hopefully, get your attention.

-DUNCAN:

-Give us a look at one?

-Certainly.

In an attempt to scare the Dragons into a supernatural investment,

North Londoner Andrew Hannon has certainly caused a stir in the Den.

He needs £50,000 to market his horror experiences to the masses.

But Peter Jones just looks confused.

I'm sitting here thinking, "What on earth are you on about?"

You've come out from under a table with a mask on.

Effectively, they're both dares. They dare you to do things.

I don't get it. Give me an idea. A very quick snapshot of the story.

OK, for the first one which you do by yourself, you need...

It gives you a set of specific instructions at the beginning.

-I do this on my own?

-For the first one, you would.

You need to be alone in your room and dim the lights as much as possible.

-OK, I'll imagine that now.

-OK.

It then asks you to speak out loud a couple of times,

-given certain prompts.

-Hello? Anybody there?

-Exactly that.

It then culminates - without giving too much away -

it culminates in a decision you have to make at the end,

whether you want to invite something from the other side of the door in. That's what it boils down to.

OK, whoever is on the other side of my bedroom door,

can you come in now, please?

-And I'm now supposed to be scared?

-Correct.

But I know that it's in my imagination.

You might know that it's in your imagination

but that's only because we had a quick chat about it now.

-That is the most ridiculous business idea I've ever heard.

-I disagree. I disagree.

A damning proclamation, perhaps.

But the Dragons do, at least, seem entertained by Andrew's enthusiasm.

Will Hilary Devey find any substance in the concept itself?

Explain to me your business model.

OK, there's various retail outlets via my website.

People download online experiences, pay Amazon or iTunes,

and the order's generated and I get my royalties.

And it's generated £14,000 gross profit since September 2011.

And what is the net profit?

The net profit is a 13,500. I've put next to no money into it.

There's no overheads, and everything I've done,

I've done in my spare time from my bedroom, from internet cafes.

It's gone from strength to strength.

I've no doubt that there's millions of people out there who'd try this.

I'll tell you what. Here is a worry for you.

I'm going to give you £50,000.

Being the sort of person I am, I expect a return.

OK.

So far, I can't see it.

Compared to what I've put into it, it's made a substantial profit.

Substantial? You're talking about 13 grand.

That's without the marketing. That's without television marketing

and what I want to do is step it up now and target

very, very specific horror channels in the UK and the US.

You're talking audiences of, you know, 9-10 million people.

But once someone's done this and they know it,

they tell their mate about it, everyone knows it, that's it.

That's what I worried about as well. But if you went to see a good film,

you wouldn't tell your friends and ruin it for them.

You might recommend the film.

I think this works on the same sort of level

where people dare friends to do it. Or they'd say,

"I tried it. I couldn't make it to the end. You have a go."

A spirited fight-back from the plucky entrepreneur.

Duncan Bannatyne looks engrossed.

Will Andrew's book be his key to gaining investment?

-Andrew, how much is this book?

-£15.

-You've sold how many of these?

-500 hardcopy books.

-How many have you sold in total?

-10,000 units.

10,000?

-Yeah.

-That's a lot of books.

OK, I've read the first three, I think.

Have I read one that you've written?

One Light In The Graveyard was me.

You said they're scary

but One Night In The Graveyard, for me, is funny.

-Some might be funny, some romantic, some might be...

-Yeah, fair enough.

-I'm getting your style of writing.

-Right, very good.

Daytrip?

Daytrip is my one.

-I'm going to read Daytrip.

-OK.

Is this really...?

So this is...

Andrew, you are for real?

I am entirely for real.

I just want to understand.

You created some short stories, and out of some short stories

you created some dares that people can act out themselves

which they, ultimately as a result of acting it out,

get scared at the end. Is that, in essence, what this pitch is?

-What the hell is...?

-Like I said,

some of them are comical as well as horrific.

'Why did you stop? I was going to eat you.'

Oh, dear.

I love the book. It's fantastic. I love it.

What is going on?

A rare moment in the Den.

For once, hysteria is reigning over reason.

This I have never, ever, ever seen. What have you done?

Can these multimillionaire Dragon investors put giggles aside

and regain their composure?

Hilary Devey is first to try.

I think you should just carry on.

-You're selling books. Just carry on.

-It is going well. I just believe,

if it were to take that next step up, it'd do even better.

There's a limit to how many people you can reach, doing what I do with uploading videos.

But I can't help you. I don't know this market.

-Fair enough.

-If I can't give something as an investor,

there's little point me investing, and the only thing I could give you

is money, and then I'm not in control of that investment

cos I don't even understand what I'm investing in.

-I've got to say, I'm very sorry but I'm out.

-OK, thank you.

Andrew, I think I've come to a conclusion

and I've got to tell you I've found this whole experience quite scary.

-OK.

-It took a long time to understand what your pitch was

and I'm struggling to see how this could be turned into a business.

So, I'm sorry, I'm going to have to say, Andrew, I'm out.

Rationality returns as two Dragons walk away from the deal.

Will Deborah Meaden agree with her rivals' view?

I think, to create a genre which, I guess, doesn't exist...

-Spot on.

-To your knowledge, is there anyone else doing this?

I tried to find similar things online and found absolutely nothing.

Actually, to create £14,000 worth of sales from a standing start,

I think you should be pleased with yourself.

-I think that's quite amazing.

-Thank you very much.

The trouble is,

-I just don't see I'll get a return on my investment so I'm out.

-Cheers.

I'll tell you where I am. I've been sitting here.

You know, you've sold 10,000 books, which I think

is amazing for a self-published... You know, it's brilliant.

And you've done it in exactly the right way - in your back bedroom.

You've done all the right things but you don't need £50,000.

Your market that you've attracted so far,

is exactly the market you should be staying in.

Stick to the sector and the niche that you are successful in

and you could go from there.

-OK.

-I can't invest in it so, Andrew, I'm going to say I'm out.

Thank you, Theo.

Andrew, I have to take my hat off to you. I think you've done fantastic.

Thank you.

It's a very, very enjoyable read.

You're making some money.

When you're not working full-time, you come back in the evenings,

you write a story and you put them together and that's great.

But it's not a business that's ready for investment at the moment.

It might be one day.

You might be one of the premier writers of horror stories

and I wish you the best of luck

but I've got to say that I can't invest in this.

Thank you for the book, I'm out.

-Thank you for enjoying it.

-Good luck, Andrew.

Thank you, all. I appreciate it.

-DUNCAN:

-I'm going to write one and send it to you.

So, no investment for Andrew.

But his peculiar tales did have a peculiar effect on the Dragons.

He leaves with nothing.

I don't see what's scary about that at all.

Budding entrepreneurs often come up with solutions

to awkward lifestyle problems.

Dubliner John Power was the latest.

He wanted £100,000

to help us all avoid those annoying excess-baggage charges.

Travelling airlines frequently,

I was confronted with the restrictions they have.

You're only allowed one case that you carry on board.

So I tried to solve this and I come up with the idea of the Jaktogo.

I have it as a bag and what I do then is I translate it into a coat.

It's wearable luggage.

Hardly High Street fashion but everyone wanted to talk

about John's new clothing line.

I'm not convinced.

How far do you take it? I could cut two holes in the bottom of my suit carrier

and put my arms in it and my legs through it.

That would be ridiculous.

I just think it's brilliant.

-Have you sold any?

-1,700.

-1,700?

-Yeah.

-Right, OK.

Despite being momentarily sidetracked by the sales figures,

the Dragons soon found fault with John's business model.

You really think that no airline's going to challenge you on this?

If there's a queue of 50 people all wearing one of those coats, they won't challenge you?

That'll never happen.

It's a coat.

John, any bulky items will be taken off you and put in the hold.

That is a bulky item, so you are back to where you started from.

-I'm out.

-Cheers.

Will it be a case of second time lucky

for Manchester-based twins Lisa and Helen Tse

who first came into the Den back in the early days, 2005,

with a new line in ready meals.

Having walked away empty-handed once before,

will their new product be more appealing?

Hello, Dragons.

My name is Lisa Tse and this is my twin Helen Tse

and we are from the award-winning restaurant and cookery school

Sweet Mandarin in Manchester.

We seek an investment of £50,000 for 20% equity in our sauce business.

Look at these sauces, Dragons.

Don't they look exciting, new and different?

Our sauces have no MSG, no artificial colourings and no wheat

and they're perfect for the gluten-free market.

Now, who better to tell our family story than my sister Helen?

HELEN: Thanks, Lisa.

Dragons, let me introduce you to my grandmother Lily Kwok.

She set up one of the first Chinese restaurants in Manchester

where she served these wonderful sauces

and we still serve them today at Sweet Mandarin.

Lisa is so proud of these sauces, as the head chef,

that she even put her face on them.

Dragons, did you know that the dipping and condiments market

was worth approximately £600 million,

growing at a rate of 16% year-on-year?

And did you know that the free-from market is worth around £200 million?

HELEN: There are many things in this world that divide us

but one thing that unites us is food. So, without further ado,

I would love to invite you to our family table

to try our sauces. Thank you.

A pitch to get taste buds tingling

from Mancunian twin sisters Lisa and Helen Tse.

-That's the chilli, that's quite hot.

-Sweet chilli.

-What's this one?

Barbecue. Help yourself. Feel free to dig in.

To expand their gluten-free dipping sauce business...

-Thank you, ladies.

-..they need £50,000.

On offer in return is a 20% stake.

It's very versatile.

-All different types.

-Yeah. It's your turn.

One Dragon has certainly been thorough in the testing.

Will Hilary Devey be the same in the questioning?

-I'm Hilary. Hi.

-Hello.

Your sauces are beautiful. Absolutely beautiful.

Tell me about the company to date.

Well, to date, Hillary, we've sold over 2,000 bottles.

We've made about £6,000 and the gross profit is £5,000.

Have you got any projections going forward?

For year one, we are projecting £300,000

with a net profit of £100,000.

Year two, £600,000 with a net profit of £300,000.

And where do you plan on going with the business?

We just finished the SALSA accreditation

which all the main supermarkets need

but we've already had interest from a multiple.

Which store?

-Morrisons.

-Ah, right.

They've agreed to terms once we've passed it and we've passed this week.

-Excellent. Well done.

-Thank you.

Tasty product and interest from a supermarket. It's good start.

Theo Paphitis wants to know more about the likeable entrepreneurs.

-Girls, can I ask you, have you got a successful restaurant?

-Yes.

Do you own the restaurant?

It's owned by me, Helen and Janet. Three sisters.

OK. Turnover?

Last year we made about £480,000.

-So, half a million quid.

-Yeah.

-Did you make a profit?

-We did.

Last year, in profit we made about £150,000.

Right.

We actually competed in a competition

and in 2009 we beat 10,000 restaurants in the UK

to win best local Chinese restaurant, which was with Gordon Ramsay.

So, just to clarify, are you offering investment in everything

or are you just getting investment in the sauce?

-We're asking for investment in the sauce.

-In the sauce.

-So, literally, new company, that sauce.

-Yes.

So, what roles do you play?

So, there's three sisters. All involved in the business?

-Well, I'm mainly the chef.

-You're chef.

-I'm front of house.

And Janet is a full-time mum at the moment.

And have you put any cash in to start the business?

We did, we put about £10,000 in.

10,000 each or 10,000 as a group?

Just my life savings.

OK. Just your life savings.

JUST my life savings(!)

So, £10,000.

It's a confident performance so far from Lisa and Helen.

Peter Jones famously invested in a similar product.

Will he be tempted to add this one to his sauce portfolio?

-Lisa, Helen, hello.

-Hello.

I think you've done an amazing job.

You've got a business. It's fantastic.

But I think there is a lot of confusion over the brand.

Are you Sweet Mandarin the sauce or are you the famous restaurant?

I also think that your level of uniqueness, at the moment,

is not good enough.

And when you go to have negotiations with the suppliers

that are going to take this product to market,

that's going to be a very key consideration to them.

It's not good enough to make money.

It won't cut it.

So I'm going to say that I'm out.

A damning assessment

and an early setback for the forlorn-looking sisters.

Now, will Duncan Bannatyne be able to ignore his rival's concerns?

Lisa, Helen, you said you've sold 2,000 bottles to date?

Yes.

About 2,400 and something.

Right.

Anything else?

Well, we also have the leading...

Chinese grocers to all the restaurants

which is Wing Yip.

They have ordered with us

50 cases per sauce per week, starting off.

That contract alone is worth 250,000.

-DUNCAN:

-This is interesting.

And then we've also got the multiple who we've talked to.

Straight away, the senior buyers picked it up and, like I said,

they've been in talks with us as well. You're getting it,

literally, hot off the press.

Right.

Based on the fact that you've done so much

and have had so much success,

I just feel that I've got to make you an offer.

So let me suggest I offer you £50,000

for 40% of the company.

How do you feel about that?

We are delighted to get an offer.

Lisa and Helen's emotions take a U-turn

as the revelations rescue their investment dreams.

But at a cost - twice the level of equity they wanted to give away.

Can they draw out a better offer from Hilary Devey?

How did you get in with Wing Yip?

They've had lots of customers asking for it

and we booked an appointment to meet with the directors

and we pitched to them as well.

They tried our sauces.

They were won over by the product, the quality of the taste

and they know that we can deliver.

I think you've got something.

I like you, I like your enthusiasm...

-Thank you very much.

-..and I think I could add value to you.

I will match Duncan's offer

cos I'd like to work with you

and I think we'd have a bit of fun along the way.

-THEO:

-Hmm, that's two offers.

You're definitely investable.

So, what I need to think about is can I better their offers?

On the basis that you've got two offers at 40%...

..I'm just not going to be able to put a counter offer to you.

I'm out.

Two offers. But both are for nearly half their company

and the twins have just one Dragon left.

I actually think this is a market where you have got to sell

huge amounts to get any sensible return on your investment.

At the moment you're saying you're going to sell to somebody like

Morrisons and, I guess, any of the big multiples.

How much does it sell for?

We make them for 50p. We would sell it in for about 80p to 90p.

OK, my worry is, I don't think you're going to get

anything like the margins you think you're going to get

because as you get into the big multiples,

they're going to squeeze and squeeze and squeeze and squeeze

until you're left with very small percentages.

Therefore I don't get return on my investment.

So I'm out.

Could we ask you...

..would you be prepared to work together?

-Have we got a deal?

-Yes.

-Well done. Well done.

-Thank you.

Helen and Lisa have done it.

They've agreed to part with more of their business

but they do have two influential Dragon investors onboard.

The Den is a meeting place where entrepreneurs hope to first set eyes

upon their future Dragon business partner.

But Falmouth-based Sam Lanyon

had a different kind of relationship in mind

as he popped the question of whether his invention was worth £100,000.

Auto Wed allows happy couples

to select a short wedding ceremony.

It then vends two rings

and a personalised wedding certificate. It's only a pound to get married today.

Deborah.

Will you take my hand in marriage?

Of course I will!

Best man?

MACHINE: Do you take this person, to have and to cherish?

I do.

MACHINE: Congratulations, you may now kiss.

No time for sweet talk from Duncan Bannatyne

as he got straight down to business.

-Sam.

-Yeah.

-Have you sold any of these machines?

The first one we sold to a museum in the States,

this one was going to the Camera Obscura in Edinburgh.

They enquired about another one, cos they're worried about the queues.

I don't think they should worry about the queues.

However, a smitten Peter Jones

was keen to know more about the young inventor.

Sam, what's your background?

I grew up in the wilds of Cornwall, didn't go to school,

just pulled apart radios and wired things up.

-Seriously, you didn't go to school?

-No.

-Did your parents teach you?

-Yeah, it took awhile,

but three As at A-level and a Masters degree in electronic engineering.

The motivation comes from yourself.

In the end, the Dragons thought the product was just a gimmick.

It's great fun and I can see that

on the pier at Weston-super-Mare.

But they did think Sam himself was worth a second date.

I just think it is so sad

that you've come into the Den with that product,

-because you are entirely investable.

-Well, thank you.

But I won't invest £100,000 in that.

I'm out.

So far tonight, only one business

has received the backing of the Dragons.

To find out why Hilary Devey

and Duncan Bannatyne chose to back Ellen and Lisa's dipping sauce,

press the red button at the end of the programme.

Steve Jobs started Apple from his garage, and that turned out well,

so time to see how 27-year-old Matthew Conridge gets on

with the venture he began in his bedroom.

If he could just create a company worth 0.001% of Apple,

he'd be doing extremely well.

Hello.

Hello, my name is Matthew Conridge. I'm here today to ask

for an investment of £200,000

in exchange for 10% of my company.

Mamka is an online retailer.

We currently have a range of products,

which quite varies. They go from inflatable boats

to camping accessories,

pools, toys, games and gifts.

I started back in January 2007.

I had £600 in cash in my pocket

We've just completed our fifth year of trade, and achieved a turnover just shy of £2 million

with a net profit of around £110,000.

We've also just completed relocation

into a new 42,000 square foot distribution centre

and we've been lucky enough to win a raft of awards

and recognition for what we've done.

I thank you for your time today

and look forward to answering any questions you may have.

A slightly nervy delivery from the young entrepreneur Matthew Conridge.

To fulfil his grand plans for the Devon-based business,

he needs a £200,000 investment

and is willing to part with just 10% in exchange.

Peter Jones looks to have something on his mind...

-Matthew.

-Hi.

-Hello.

You said something which worried me when you described your net profit.

-I think you said something like "around" or "approximately" £110,000?

-Yes.

We haven't quite finished the financial year yet.

OK, so to get a true valuation of this business, then,

what did you do last year?

OK, last year we turned over £1.31 million

with a net profit of £89,000.

Gross profit was around about 26%.

OK.

We hold a high level of stock.

At the moment, for example, we're holding around £550,000 of stock

but the stock turnover is quick

and there's no deadlines within that amount.

OK, so, I'd like you to just explain to me why...

you've gone for such a crazy valuation

-with...so little profit.

-Mm-hm.

What makes you think that's a good deal for me?

First off, it's a starting point for negotiation.

No, you normally come to the table of negotiation

-where it looks and seems fairly reasonable and then you get into a debate.

-Yep.

At the moment this...is quite a long way from being reasonable.

What I would say to counterbalance that is we have a solid five-year plan in place,

which shows growth to around about £10 million in five years.

Fluent responses to some tough questions.

Matthew seems to have set aside his early nerves

but will his composure be put to the test by Deborah Meaden?

Erm, I'm a little worried about the stock

cos you're carrying a run rate of around about half a million.

How much of that is carried over from last year?

About £240,000 to £250,000.

What do YOU think about that?

I think it's slightly higher than we would have liked

and that was mainly due to the fact that we were in warehousing,

which became too full.

-We didn't have enough...

-No, that isn't the answer to stock.

The truth of the matter is if you buy the right product,

you guess your market well enough,

-you end up with low levels of stock at the end of the year.

-Hmm.

What I'm trying to understand,

I think there's an issue within your stock.

I don't think there is an issue.

Last summer was pretty horrendous in terms of weather

and we still managed our stock very well.

But you were left at the end of last year

-with £250,000 worth of stock.

-Hmm-mm.

That's half of your stock.

-Matthew, you're going to have to try and help me here.

-Yep, mm-hm.

£500,000 of stock holding

-for a business on that sort of turnover, it doesn't make sense.

-OK.

-Let's go through a few numbers back again.

-Mm-hm.

Debtors and creditors at this year end.

Er, the bank is around about 198.

OK, debtors. What are your debtors?

We would probably be owed only a small amount, £6,000 or £7,000,

because the money continuously comes in to the business.

-All right. So, who owns the company?

-I own 75%.

-OK.

My mother owns 5%

and an outside investor owns 20% of the company.

-For nothing? Or for money or...?

-The amount of cash was zero.

What benefits does he or she bring?

It's a complicated deal involving contribution from an outside company.

What's the best way to put this...? Erm...

..a discount we receive.

OK, "a discount we receive,"

is an answer I'd expect from my 16-year-old girls

-that are doing GCSE business.

-Yeah, I can understand that, absolutely.

Erm, we receive a discount, we receive a rebate, erm, on...

-..Products you sell.

-Exactly that.

So somebody gives you discount on something he sells

and he gets 20% of the business?

-Mm-hm.

-What happens when you say you don't want to trade with him any more?

-That wouldn't be the case.

-Let me just say, that does not make sense.

A tetchy exchange, but the confident young businessman

is not buckling under the pressure.

Will Hilary Devey offer any respite?

Matthew, hi. Erm...

-are you writing your own software?

-No.

-Do you own the source key?

-No.

It's a system which was initially created

for multi-channel retailers facing the consumer

and it's had the back office software, and the locations,

and the dispatch tagged on to the back of it.

So, basically, you've no USP.

-I would disagree with that...

-There's no intellectual property with your IT,

which is a must to grow that business.

We have open access to the software to allow us to do this.

But then they will charge you.

No, not if they... If WE develop it,

all they will charge us is to tag it on

and so it's not a huge amount...

Erm, I disagree with you emphatically.

I've been there, done that and it doesn't work.

We have done this three or four times in the last year-and-a-half.

Erm, I'm at a loss. What have you got that is unique here?

-You're an importer of a product.

-Mm-hm.

-You've set up a website.

-Mm-hm.

-Am I missing something?

There's nothing specifically which is different to us

than a lot of other people out there,

but what WE are is better than everybody else out there.

OK, I'm going to tell you, in terms of running an online business,

actually, you do things pretty badly

and the sad thing is I don't think you realise it.

OK, I appreciate what you're saying and your opinions.

I would disagree that we're a poor online business.

We've got five different brands

and each website has a 365-day returns policy.

Each order can be purchased before seven o'clock in the evening

and with the customer the next day.

But this type of business is supposedly low overhead,

low infrastructure cost,

-seriously good control of stock management.

-Mm-hm.

You've not talked about things like, "I'm going to increase my stock turn. How am I going to do that?

"I'm actually going to do deals with my suppliers

"and I'm going to use my supplier to deliver direct to my customer."

In my own opinion - and it's my own opinion - I think that's a terrible business model

because it relies on the supplier and the deliverer

to act as your customer service,

your physical communication with that customer.

-Matthew, do you know what, I am totally shocked.

-Right.

I'm totally shocked that you're not even slightly open-minded.

What you told me today is, "You know what,

"I don't need you because I'm doing it better than anybody else."

Just to say, I think if, instantly, I said,

"That model sounds a lot better than mine,"

I would have looked pretty spineless.

-I think I need to speak up for what

-I

-think is right and...

I think, when you're looking for an investor,

-sometimes you've got to pick your moments when you want to be disagreeable.

-Mm-hm.

-Matthew, I'm out.

-OK.

No let-up for Matthew as Peter Jones refuses to do business with him.

And retail expert Theo Paphitis looks to have made up his mind too.

Matthew, you came in the Den with a ridiculous valuation.

You've valued people here at nothing.

You have started something, which is...

It is pretty good, with no money, starting that,

but you're not investable at the moment.

OK, I appreciate your comments.

-I think some of them were incredibly harsh.

-Yes.

I started a business with 600 quid

and it reached a turnover of £2 million profit

and it employed people in the local area...

But it's not going to continue to grow

unless you start to reconsider your business plan.

I've got numerous e-commerce businesses

that don't have to hold anywhere NEAR your stock holding.

-Right.

-So there's a lesson to be learned there.

Yeah, I appreciate every single point that you've laid out.

I still stand by the fact that I think you were incredibly harsh

and I've worked so incredibly hard, put a plan in place...

-You're not listening!

-No, I most certainly am...

Well, if I've been harsh and you HAVE been listening

-then it's been a great exercise.

-Mm-hm.

Yeah, I'd agree with that.

-I think there's a certain way...

-Matthew, I'm out.

Thank you for your time.

Well, Matthew, I think the whole model is wrong.

Right.

And I think you need to go back to the drawing board

and think again and redo your five-year plan.

-OK.

-And for that reason, I'm out.

-I appreciate your comments. Thank you.

Two more Dragons walk away from the deal.

Now, only Duncan Bannatyne and Deborah Meaden

stand between Matthew and complete failure in the Den.

Matthew, even if I persuaded you to change the business plan

the business cannot be worth £200,000 for 10%.

To negotiate, I think I would have to offer you £200,000

for 105% of the business.

-OK.

-So, you're miles off on value and you're miles off on the percentage.

I've got to say now that I'm out.

-OK, well, I thank you for your time.

-Thank you.

Erm, I have a suspicion that the more warehousing you've got,

you are going to fill it...

-Mm-hm.

-..and your stock holding is about to get worse.

The point is, we've rented this place with the, er,

-to match our five-year busin...

-Matthew...

-No, I can...

-What I don't get,

how you could have an opportunity like this

and every time somebody raises an issue

you're, "Yep, got it, back at you!"

-I don't get it.

-That's not the case. What I...

-But it feels like that.

-The thing I've...

-It doesn't... You see, you're not even...

-Sorry, OK.

-Please, carry on. The key...

-I've got...

Do you know? I'm not going to waste my words any more.

You're not listening,

I'm not going to make any difference to you whatsoever so I'm out.

OK, well, I thank you for your time.

Thank you, Matthew.

An unusually irritable end to proceedings.

Matthew may have stood his ground but to no avail.

He leaves with nothing.

I feel I received a lot of advice from the Dragons.

I feel that I also got a bit of a pasting quite early on,

which made me become defensive.

They picked up on a stock issue,

which I need to investigate and I most certainly will do,

but I had to defend my business because I think it's got a lot of potential.

Other entrepreneurs who tried and failed in the Den

included retired policeman Trevor Joy from Kent,

whose product was inspired by a nasty accident.

There are millions of DIY enthusiasts

and I would think most of them have got one of those in their toolbox.

I believe, for safety's sake,

they should have one of those - a Sawsafe -

to prevent them having... one of those.

Trevor was hoping to walk away with £80,000,

but it wasn't his invention that caught the Dragons' attention.

The product looks great - your thumb doesn't. Tell me about your thumb.

Sawed it off, basically.

There are thousands of accidents like this.

Did that drive you to come up with this innovation?

I'd been thinking of ways,

but this was actually a eureka moment in the middle of the night.

I can't really say I've stood over anybody and watched them saw wood.

How does it help you?

Holding on to there...

Perfect cut and perfectly safe.

While all in the Den saw merit in the product...

It's an innovative little idea and I can see it works.

..it was Theo Paphitis who summed up the investment mood of the Dragons.

You've been to see all the DIY stores?

No, I've contacted a couple and the door's been shut.

Put your best suit on, turn up at their office -

you're going to find out very, very quickly

whether you have a product that has a demand.

But this is not an investable business for me.

I'm afraid I'm out.

Next in the Den were Polish-born sisters Malgorzata and Dorota,

who wanted to transform the nation's bums and tums

and needed a precise £77,000 to do it.

This is Aqua Miracle exercising pool.

This product helps to get rid of cellulite and helps to lose weight.

Duncan Bannatyne knows a thing or two about this sector

and seemed eager to see the product in action.

Can Theo get in and show us?

-Pretend it's full of water.

-Yes, of course.

And you can start doing exercises. You can do sit-ups, jogging.

Can you do headstands?

-It's for the lower part of your body.

-How many have you sold?

We haven't sold yet.

Do you know, I really thought

that was going to be the answer.

We know lots of physios and they said it's a really good product.

But the backing the sisters received from those health experts

didn't influence the decision of these business experts.

I will give you my constructive, honest feedback.

It's absolutely stupid.

It's three inflatable rings.

It's just one of those things you got wrong.

We still believe in this idea.

It's not a business, so I'm going to say that I'm out.

You can learn many things from children -

how much patience you have, for instance.

But for our next entrepreneurs,

Gill Hayward and Kellie Forbes from Essex,

it was their children that inspired their business.

So, will the Dragons see an opportunity to invest in it?

Hello, my name is Kellie Forbes,

and this is my business partner, Gill Hayward,

and we are here today to ask you for an investment of £60,000

and in return we would like to give you 10% of our business.

YUUbag is an exciting desk in a backpack,

it's ergonomically designed, also has a chest strap with a whistle,

and an outside water-bottle holder so there are no inside spills.

It has a fold-down desk, and as we all know,

children love pockets - YUUbag is full of them.

It even has a secret compartment.

GILL: Our strategy from day one was to "act big, be big".

So, armed with a prototype, we approached Nickelodeon

with a proposal that would allow a start-up company

access to a TV advertising campaign.

With the help of our children and a shoestring budget,

we created a TV ad.

The first spot aired at 6.55 in the morning,

and amazingly, just minutes later, we'd made our first website sale.

We sold out in seven weeks.

In the 20 months since trading,

we have sold 13,000 bags.

We've attained a turnover of £525,000.

Thank you very much. Would you like to see our bags?

A highly professional pitch

from "mum-preneurs" Kellie Forbes and Gill Hayward.

They need a cash boost of £60,000

to grow their fun-packed children's rucksacks into a global brand,

and they're offering a 10% stake in return.

Theo Paphitis is first to question the two friends.

Right, ladies, hello.

-I'm Theo.

-Hi, Theo.

-Wow.

£500,000 turnover in...20 months?

-BOTH: Yes.

-Did you make any money out of it?

We turned a small profit at the end of last year of £6,000.

And the new year - let's assume you get no investment here - how much are you going to turn over?

We're going to turn over £720,000.

And you estimate you're going to make...

£130,000. 129, yeah, 130,000.

OK.

-How much do you sell the big bag for?

-£43.

-That's retail.

-That's including VAT.

-OK, last question from me,

-60,000 quid...

-What are we going to do with it?

-Yes.

-Well, we want to have enough stock in the UK or whatever country

we're in so that we never have to have customers waiting for our bags.

-How much is going into stock?

-50, 55,000.

-So, all of it?

-Yes.

-Well, not all of it.

-In effect, in effect.

-It's all going into cash flow.

-Yes.

-OK, thank you.

Confident answers from the assured entrepreneurs.

Deborah Meaden wants to drill down into the business itself.

Hello, I'm Deborah.

Hello. Hi, Deborah.

So what has changed in your model now

that's going to drive profit going forward,

when you weren't driving profit in the past?

-Although you had a nice, healthy turnover.

-A number of things.

We've spent a long time in the last 20 months

working out what makes our business tick,

so we've reduced our fulfilment costs substantially, we brought out

extra add-on accessories, which are higher margin.

I mean, everywhere in the business, we have just worked out ways...

So what has that now done to your margins?

Well, the production of the bag will go down from £15.87

to about...to £10.87.

The shipping is around £1.20 and that will come down to about...

-just over

-£1. Yes.

We agreed a revenue share with our designer,

so he is on about £1, and that will go down to about 80p.

So, compare your margins now to your margins previously.

The margin is £11.90, currently.

From the next orders, it will be £16.60.

Thank you.

The first-time entrepreneurs look remarkably composed in this forum.

Peter Jones is intrigued.

So, a little bit about your background.

We both met when we were 21.

We've both come from advertising backgrounds and I left

and started up a firm and Gill continued her career in advertising.

I've worked in TV advertising and sales and buying

for Viacom for ten years

and took redundancy when they closed part of the business.

So, is this going to be a full-time thing for you both?

Yes, that's our plan. Absolutely.

We love what we do as well, we really are excited about it.

Um....

Well, Kellie and Gill...

GENTLE LAUGHTER

Um....

PETER SIGHS

I love the product.

Seeing my kids every morning pick up their rucksack,

I think yours is better. I love the quality of the product,

-but I just think you've gone into such detail.

-Thank you.

I'm going to make you an offer.

I think it's about how do we take this brand

and really extend it and make it something far bigger?

So, I'm going to offer you the full amount of money.

But I want 30%.

OK. Thanks Peter.

The impressive businesswomen finally receive an offer,

but for three times the amount they were initially willing to give away.

Will Theo Paphitis now choose to undercut his rival investor?

So, would I invest 60,000 quid in you two?

And the answer is, yes, I would.

BOTH: Thank you.

-But, for me to make a difference to this business...

-Mm-hm.

..I'd need to put some effort in.

-Right.

-I'd need to look at the retail channel,

where they would be in my own stores, or competitors' stores.

-I've got to have a reasonable hold in it.

-OK.

So, I too will offer you £60,000 for 30% of the business.

-Thank you.

-OK, Thank you.

-HILARY:

-Um.... Kellie, Gill.

If you could epitomise what you wanted from a Dragon,

what would it be?

We think this thing could go really big,

we'd like to say go global.

But we don't think we can do this on our own.

-I think your hurdle is finding the distribution channels.

-Mm-hm.

And that, I believe, I could be of great assistance with.

So, I would offer 60K...

-..for 30% as well.

-OK. Thanks, Hilary.

Unusually, the Dragons seem to be in agreement

about the level of equity they require.

Will Deborah Meaden get nearer to the 10% Kellie and Gill

originally wanted to part with?

I think it is fair to say that the product's good.

You know what you're doing, you're very smart, perceptive, all of those things.

But you haven't taken the UK yet

and you're already looking international.

I think what faces you

is how you manage to get the penetration you want

within your home market and manage that overseas piece.

-Yes.

-Yes.

-And it's something I do in many of my businesses.

So, I too am going to make you an offer.

Um.... And I'm going to offer you the full amount,

£60,000, for 30% of the business.

-Thank you.

-Thank you, Deborah.

DUNCAN: OK.

So, I think you're looking for other offers, then, at the moment.

We'd like to receive all offers. If they were forthcoming, obviously.

You're not bothered if they're better?

I think, you know, we'd weigh them all up in context.

Oh, right. I was going to make you a better offer,

but, what you're saying is you want to hear worse offers?

Oh, Duncan, that is a trap.

-It's not...

-You have no idea what they consider better or worse,

because sometimes better can mean a better percentage or more input,

so you are absolutely right.

-Make your own minds up on YOUR value terms what is better.

-Thank you.

I think it's absolutely revolting and ridiculous

that Deborah would suggest I was trapping you.

Deborah's just trying to put her foot in the door,

because she wants you to choose her.

She thinks if she speaks louder, that's what you'll do.

Do you know, this just looks such a great business.

So, I'm going to offer you the full amount.

For 25% of your company.

OK. Thank you, thank you, Duncan.

Terrible tactic that, Deborah.

You've both now got a dilemma, haven't you?

PETER: You can go to the back.

Thank you. OK.

The Dragons' true colours are exposed

as the rivalry finally comes to the fore.

It's rare for entrepreneurs to receive offers

from all five investors,

but will Kellie and Gill choose expertise,

enthusiasm, or equity?

THEY CONFER

Um.... Thank you, all, very much indeed.

To get your input and your offers, we're...

blown away, actually, if the truth be known. Genuinely blown away.

Um....

Could we...could we ask whether Deborah and Peter

would be willing to do something together?

Um....

KELLIE If you equally would rather not... It's an open question.

I would instinctively turn round and say, no,

I think for £60,000, it would be better to be all in.

Why do you ask that?

I'm interested to know what that combination offers you

that you think one person doesn't.

I think from your vision

and your know-how of where we are as a company appealed to both of us.

Could we, er...? Shall we go?

THEY CONFER

(If they want us to choose between one or t'other,

(which one would you want to be with?)

THEY CONTINUE TO CONFER

(They're going to ask for more.)

Do you think? I think so, yes.

Wasn't an easy decision for us.

But the reason you've given for two Dragons makes total sense to me,

so, £60,000, the full amount of money...

..for 15% each.

APPLAUSE AND LAUGHTER

Kellie and Gill have done it.

High five!

It was a tense and unusual negotiation,

but their determination has secured them the finance needed

and two well-connected multimillionaire investors.

To get five offers from the Dragons, is just, it's overwhelming.

It's very exhilarating. It was a better deal with better equity.

But less about the equity.

Yes, a slice of the pie might be slightly smaller for us,

but hopefully the pie will be considerably bigger.

I can remember many memorable Dragon versus Dragon battles

in the den, but it's rare to have all five vying for a deal.

The great news for Kellie and Gill

is not just that they got the investment they wanted,

but that five hard-headed Dragons

all thought they were so impressive, they were worth fighting for.

Now, if you want to find out more about how Kellie and Gill

managed to get all five Dragons competing to invest,

press the red button now.

Goodbye.

Next week in the Den...

Do you want an investor?

It doesn't matter if you're turning over £160,000

if you're losing money at the end of it.

Actually, if I'm honest with you, I think it's a bit boring.

I think that would be the biggest lesson, is what you want

from a business, not how much of it you control or own.

I want to be there...

..when you make it.

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