0:00:26 > 0:00:28These are the Dragons,
0:00:28 > 0:00:32five of Britain's wealthiest and most enterprising business leaders.
0:00:32 > 0:00:34Over the next six weeks,
0:00:34 > 0:00:39they'll make or break the dreams of dozens of budding entrepreneurs.
0:00:40 > 0:00:43I don't know what day you were born on but I wasn't born yesterday.
0:00:43 > 0:00:45Do your homework.
0:00:45 > 0:00:49No, you're not listening to me, and I buy this product.
0:00:49 > 0:00:52It is not a brand new concept.
0:00:52 > 0:00:56Sometimes you just lose investment because you screw it up
0:00:56 > 0:00:58and you just did.
0:01:04 > 0:01:07The multi-millionaire investors have each built up
0:01:07 > 0:01:08their fortunes from scratch.
0:01:13 > 0:01:15Retail magnate Theo Paphitis,
0:01:15 > 0:01:19hotel and health club owner Duncan Bannatyne,
0:01:19 > 0:01:23leisure industry expert Deborah Meaden
0:01:23 > 0:01:27queen of logistics Hilary Devey
0:01:27 > 0:01:30and telecoms giant Peter Jones.
0:01:30 > 0:01:35The Dragons have the credentials, the contacts, the commitment
0:01:35 > 0:01:39and the cash ready to invest, but only in the right business.
0:01:39 > 0:01:42Will any of these hopeful entrepreneurs
0:01:42 > 0:01:43walk away with their money?
0:01:52 > 0:01:57Welcome back. These are testing times in the economy
0:01:57 > 0:02:00but that doesn't deter anyone here in the den.
0:02:00 > 0:02:03The Dragons are on their search for the best ideas,
0:02:03 > 0:02:07the ones that will succeed whatever the economy is doing.
0:02:07 > 0:02:09They are ruthless in that quest.
0:02:09 > 0:02:13This has always been a forum for the fearless.
0:02:13 > 0:02:17The Dragons are investing their own cash in the den
0:02:17 > 0:02:20so don't be surprised if they ask searching questions.
0:02:20 > 0:02:23How well will our first entrepreneur answer them?
0:02:41 > 0:02:46Hello. My name is Matt King and I am the inventor of WeQ4U.
0:02:46 > 0:02:49I'm pitching today for £150,000 investment
0:02:49 > 0:02:55in return for a 1% equity stake for my established profitable business.
0:02:55 > 0:02:56Sorry to interrupt you.
0:02:56 > 0:02:59Did I get it right, you said 150,000 for 1%?
0:02:59 > 0:03:01That's right, yes. My company specialises
0:03:01 > 0:03:05in helping people get through to busy call centres
0:03:05 > 0:03:06without having to wait on hold.
0:03:06 > 0:03:09I'm going to show you how we do that with one of our products,
0:03:09 > 0:03:12the WeQ4U app, which is available as a free download.
0:03:12 > 0:03:15To use it, you just open the app,
0:03:15 > 0:03:19enter the number you wish to reach and hit start call.
0:03:19 > 0:03:21PHONE RINGS
0:03:21 > 0:03:23'Remember, if you get stuck in a queue,
0:03:23 > 0:03:27'just press 9 star and we queue for you.'
0:03:27 > 0:03:29Now we're being put through to the call centre.
0:03:29 > 0:03:33'Thank you for calling. All of our agents are busy at the moment...'
0:03:33 > 0:03:37So now we're stuck in a queue. We just press 9 star.
0:03:40 > 0:03:42'Thank you for using WeQ4U.'
0:03:42 > 0:03:45Now we can end the call. There we go.
0:03:45 > 0:03:46Now we're waiting in the queue
0:03:46 > 0:03:49but your phone is no longer connected to the call.
0:03:49 > 0:03:53We are queuing for you and we'll be reconnected automatically
0:03:53 > 0:03:55when the agent answers.
0:03:55 > 0:03:57It's a real no-brainer for anybody to use.
0:03:57 > 0:04:00The WeQ4U app is not what we sell.
0:04:00 > 0:04:02What we sell is the business product
0:04:02 > 0:04:03that we sell to call centres
0:04:03 > 0:04:06and that's actually the main focus of our business because
0:04:06 > 0:04:09it generates substantial ongoing revenue streams for us.
0:04:09 > 0:04:13We already have several high street brand name customers.
0:04:13 > 0:04:16Last year, we sold over 1 million minutes of WeQ4U business
0:04:16 > 0:04:18to UK call centres alone.
0:04:18 > 0:04:21Thank you very much for listening to me today.
0:04:24 > 0:04:28A highly professional pitch from South Londoner Matt King.
0:04:28 > 0:04:31His technology combats the annoyance of lengthy waits on hold
0:04:31 > 0:04:33to customer call centres,
0:04:33 > 0:04:37but he's looking for an investment of £150,000
0:04:37 > 0:04:40in return for just 1% of the business.
0:04:40 > 0:04:44Hilary Devey needs more information.
0:04:45 > 0:04:47Matt, hi, I'm Hilary.
0:04:47 > 0:04:52Tell me about the company to date.
0:04:52 > 0:04:55We turned over £300,000 this year. Over 50% of that is profit.
0:04:55 > 0:04:59Don't go so fast. You turned over 300K this year.
0:04:59 > 0:05:02- What was the profit? - The profit was £152,000.
0:05:02 > 0:05:04Is that net profit or gross profit?
0:05:04 > 0:05:08That's gross profit, we paid off all of our loans.
0:05:08 > 0:05:13Our net profit this year, I think it's around £40,000.
0:05:16 > 0:05:18What you're saying is,
0:05:18 > 0:05:22you've valued a company at £15 million
0:05:22 > 0:05:29that turned over 300,000 with a net profit of 40,000.
0:05:29 > 0:05:31Yes.
0:05:31 > 0:05:33How have you arrived at that valuation?
0:05:33 > 0:05:35Well, we're looking at the size of the market, really.
0:05:35 > 0:05:40According to the Department of Trade and Industry, the UK market...
0:05:40 > 0:05:42You can't...!
0:05:42 > 0:05:43Are you for real?
0:05:48 > 0:05:52A focus on the valuation and not the new technology
0:05:52 > 0:05:56is not an ideal start for any entrepreneur.
0:05:56 > 0:06:00How will Matt fare under interrogation from Duncan Bannatyne?
0:06:02 > 0:06:05Matt, can you explain to me how the Department of Trade and Industry
0:06:05 > 0:06:11evaluated the market for people who want to buy an app?
0:06:11 > 0:06:15Sure. There was a recent study by the Department of Trade and Industry
0:06:15 > 0:06:17that found there were 6,200 call centres in the UK
0:06:17 > 0:06:20with 10 or more staff taking or making calls.
0:06:20 > 0:06:2366% of those are inbound positions
0:06:23 > 0:06:26and the average agent salary is £15,000 a year.
0:06:26 > 0:06:31The average reported answer rate at the call centres is 95%.
0:06:31 > 0:06:34I don't know what any of that's got to do with my question.
0:06:34 > 0:06:37I am answering your question, I'm explaining how I get there.
0:06:37 > 0:06:38Today.
0:06:38 > 0:06:41If you multiply that, that means the current spending
0:06:41 > 0:06:45on answering inbound calls is £13.7 billion a year.
0:06:45 > 0:06:49That means the 5% of abandoned calls, by the same logic,
0:06:49 > 0:06:51are worth at least £700 million...
0:06:51 > 0:06:54This is a complete wind-up. Why are you here?
0:06:54 > 0:06:56This is not a wind-up.
0:06:56 > 0:06:58Of course it is, you're a sensible guy,
0:06:58 > 0:07:00you're not delusional, you're trying to have a bit of fun.
0:07:00 > 0:07:03The fun is about to backfire very seriously
0:07:03 > 0:07:06and you're about to go up those stairs faster than you came in.
0:07:06 > 0:07:09Why on earth would you come in here and try and suggest
0:07:09 > 0:07:12that a business that is making diddly squat is worth 15 million
0:07:12 > 0:07:16- when you have a technology that isn't proprietary?- It is.
0:07:16 > 0:07:19- No, it's not.- Can you ask him the question he hasn't answered,
0:07:19 > 0:07:22like does the call centre need to have the software on
0:07:22 > 0:07:24for the app to work? Yes or no?
0:07:24 > 0:07:28This cannot be answered with a yes or no answer.
0:07:28 > 0:07:30The app is distinct from the WeQ4U business solution.
0:07:30 > 0:07:32If they have the business solution,
0:07:32 > 0:07:35nobody needs the app to get through without waiting.
0:07:35 > 0:07:36That's the answer.
0:07:38 > 0:07:42Matt, you have created something that you are selling into a market
0:07:42 > 0:07:44and you're making a bit of profit.
0:07:44 > 0:07:46So far, so good.
0:07:46 > 0:07:49The trouble is, what you have told me in coming in
0:07:49 > 0:07:53and asking for £150,000 for 1%
0:07:53 > 0:07:56is that you might be bordering on the arrogant.
0:07:56 > 0:07:57OK.
0:07:57 > 0:08:01I have to tell you, I can absolutely guarantee
0:08:01 > 0:08:06you're going to cite all of those big social networking sites
0:08:06 > 0:08:08that started in somebody's garage,
0:08:08 > 0:08:11and because of the size of the market, look at it now.
0:08:11 > 0:08:15I'm sorry, but at that stage in their early days,
0:08:15 > 0:08:20they were not valuing their business at 15 million.
0:08:20 > 0:08:24Unless you can tell me in 30 seconds flat why you think it's OK
0:08:24 > 0:08:27to come in and ask for 1% for 150,000,
0:08:27 > 0:08:29I am absolutely as quick as anything going out.
0:08:29 > 0:08:31OK, I'm going to start with that then.
0:08:31 > 0:08:34Really, a business is worth what people are prepared to pay for it
0:08:34 > 0:08:37and what the vendor's prepared to accept for it.
0:08:37 > 0:08:40That's the reality of the situation I'm sure we're all aware of.
0:08:40 > 0:08:42That's 10 of your seconds.
0:08:42 > 0:08:44I am going to use the Facebook example
0:08:44 > 0:08:46because their valuation of 104 billion based on just...
0:08:46 > 0:08:50Having told you that I'm not accepting that,
0:08:50 > 0:08:52you've got 10 seconds to come up
0:08:52 > 0:08:54with something other than the same old, same old.
0:08:54 > 0:08:57This is a unique product in the marketplace,
0:08:57 > 0:09:00the best product in the marketplace at solving this problem,
0:09:00 > 0:09:03which costs call centres a huge amount of money every day.
0:09:04 > 0:09:06I have to tell you, this is disappointing.
0:09:06 > 0:09:08You are smart, you've got a product that works.
0:09:08 > 0:09:11If you'd come in here with a sensible valuation
0:09:11 > 0:09:13asking for a sensible sum of money,
0:09:13 > 0:09:15I bet you I would have invested in you.
0:09:15 > 0:09:18I'm sorry, for all of the reasons I've just talked about, I'm out.
0:09:18 > 0:09:20Thank you, Deborah.
0:09:23 > 0:09:26A first and early blow for the confident entrepreneur.
0:09:26 > 0:09:29There are still four Dragons left.
0:09:29 > 0:09:32Will Theo Paphitis be more forgiving?
0:09:35 > 0:09:37Matt, what's your background?
0:09:37 > 0:09:40I've been programming computers since I was seven years old.
0:09:40 > 0:09:44I hold a double first class degree in physics from Keble College, Oxford,
0:09:44 > 0:09:46and a lot of the maths from that has gone into the product.
0:09:46 > 0:09:48I've worked for IBM and Logica
0:09:48 > 0:09:51and spent five years in San Francisco learning how to do Silicon Valley start-ups.
0:09:51 > 0:09:54Silicon Valley start-ups?
0:09:57 > 0:10:00My view is your whole business plan is flawed.
0:10:01 > 0:10:04First of all, any business who has a call centre
0:10:04 > 0:10:06that takes so long to answer is disgusting.
0:10:06 > 0:10:09The first thing they should be doing
0:10:09 > 0:10:13is being encouraged to sort themselves out.
0:10:13 > 0:10:15Simple as that. It is so far off humanity's radar...
0:10:15 > 0:10:18I don't want to listen to any more of this
0:10:18 > 0:10:22because we have the same views on how the call centres are.
0:10:22 > 0:10:25I've done this as a disgruntled customer.
0:10:25 > 0:10:28- What are you doing to make it better? - I'm complaining,
0:10:28 > 0:10:31and I think everyone should stop using them.
0:10:31 > 0:10:34When they lose their customers, they will give proper customer service.
0:10:34 > 0:10:38- Well...- I'm talking. That's what should happen.
0:10:38 > 0:10:42I can't invest so I'm out.
0:10:46 > 0:10:48A tetchy exchange of opinion
0:10:48 > 0:10:50and one that results in the loss of another Dragon.
0:10:50 > 0:10:54The bad news for Matt is that it doesn't look like Peter Jones
0:10:54 > 0:10:56is ready to let him off the hook either.
0:11:00 > 0:11:02Matt, you're an intelligent guy
0:11:02 > 0:11:07but do you understand the alienation as a result of what you've done?
0:11:07 > 0:11:09I don't think it has anything to do
0:11:09 > 0:11:12with the thing you're trying to describe to us.
0:11:12 > 0:11:16I think it has a lot to do with the credibility of you
0:11:16 > 0:11:19trying to come in here on a wing and a prayer
0:11:19 > 0:11:24and suggest that you have a business that is worth 15 million.
0:11:24 > 0:11:28To come in with the offer that you've put across today
0:11:28 > 0:11:30is bordering on insulting.
0:11:30 > 0:11:33That is why I'm going to tell you that I'm out.
0:11:33 > 0:11:35OK.
0:11:36 > 0:11:39- Matt.- Yes.- One of the things call centres are doing now
0:11:39 > 0:11:43is trying to encourage emails rather than telephone calls.
0:11:43 > 0:11:45Yes, there are some companies that are starting to do that
0:11:45 > 0:11:48and in fact some are even closing customer service lines
0:11:48 > 0:11:49and saying it is all email now.
0:11:49 > 0:11:53People are feeling very disenfranchised by that sort of operation.
0:11:53 > 0:11:55The point is if you make a telephone call,
0:11:55 > 0:11:57you're sat there listening to the phone ringing,
0:11:57 > 0:11:59but if you send an email, you're at your desk,
0:11:59 > 0:12:01when email comes in, it comes back in.
0:12:01 > 0:12:03Yes, we bring that to phone calls.
0:12:03 > 0:12:06I think that will prevent your business
0:12:06 > 0:12:10expanding at a rate that it will be worth £15 million in my lifetime.
0:12:10 > 0:12:11We're just looking...
0:12:11 > 0:12:14For that reason, I'm going to say I'm out.
0:12:14 > 0:12:17Thank you very much.
0:12:18 > 0:12:22Matt, I'm much younger than Duncan, actually.
0:12:22 > 0:12:25I couldn't see a return in my lifetime either.
0:12:25 > 0:12:30In fact, I couldn't even see a return in my son's lifetime.
0:12:32 > 0:12:38- Would you like me to demo the business version?- No, I wouldn't.
0:12:38 > 0:12:40What happens to the call centres
0:12:40 > 0:12:45that say all our operators are busy at the moment,
0:12:45 > 0:12:48they've actually clocked your number, one, two, three, four, five,
0:12:48 > 0:12:52we will return your call within one hour.
0:12:52 > 0:12:54What's wrong with that?
0:12:54 > 0:12:56When you're making one of these call-backs,
0:12:56 > 0:13:00you're actually taking an agent off taking those inbound calls.
0:13:00 > 0:13:03Let's say you've got 10 agents, somebody requests a call-back,
0:13:03 > 0:13:05in the next cycle, you've got nine agents...
0:13:05 > 0:13:07No, you've not, it's automated.
0:13:07 > 0:13:09..and one person making outbound calls.
0:13:09 > 0:13:11Your inbound queue is getting longer
0:13:11 > 0:13:14because you have fewer agents taking the inbound calls.
0:13:14 > 0:13:17- Pretty soon you find... - Have you ever run a call centre?
0:13:17 > 0:13:20Pretty soon you find you're an outbound call centre.
0:13:20 > 0:13:26Did anybody ever tell you God gave you two of these and one of those?
0:13:26 > 0:13:30- I believe that's the first time. - I'm telling you now.
0:13:30 > 0:13:33Also, please use them wisely.
0:13:33 > 0:13:35Would you like me to finish explaining what the problem is?
0:13:35 > 0:13:39Not really, no. There are systems out there that will log your number,
0:13:39 > 0:13:43log your call and an operator will return.
0:13:43 > 0:13:45- The feedback we've had... - They are automated.
0:13:45 > 0:13:48- Not only are they...- Those that have used...- Will you shut up?
0:13:50 > 0:13:53Matt, I'm out also.
0:13:55 > 0:13:59- Thank you for taking the time to- almost- listen to me today.
0:14:03 > 0:14:06Matt may have defended his business valiantly
0:14:06 > 0:14:08but it was the value he placed on it
0:14:08 > 0:14:10that seemed to incense the Dragon investors.
0:14:10 > 0:14:14He leaves with nothing.
0:14:17 > 0:14:20It takes a brave person to pitch to these Dragons
0:14:20 > 0:14:23but each year thousands apply to do just that.
0:14:23 > 0:14:28TV stuntman Martin Shenton is well versed in the world of risk
0:14:28 > 0:14:30as he showed off his scary take on the paintball experience.
0:14:32 > 0:14:36Imagine you were watching somebody playing a video game.
0:14:36 > 0:14:39Suddenly, you are now playing for real.
0:14:39 > 0:14:41ZOMBIE MOANING
0:14:41 > 0:14:44GUNSHOTS
0:14:48 > 0:14:52Martin was on safe ground explaining his live action game concept.
0:14:52 > 0:14:54Blue Green Yellow Dead Live
0:14:54 > 0:14:58is a live interactive shooting maze zombie game.
0:14:58 > 0:15:01You go in to the game itself, you find three coloured vials
0:15:01 > 0:15:05and you get out in the quickest time possible.
0:15:05 > 0:15:08The amount of money he wanted proved a step too far.
0:15:08 > 0:15:11Martin, I'm going to give you one chance to justify
0:15:11 > 0:15:16a quarter of a million pounds.
0:15:16 > 0:15:17For starters, for your money,
0:15:17 > 0:15:21you'd be getting three games for the first three months.
0:15:21 > 0:15:24Sorry, the first game in the three months.
0:15:24 > 0:15:27We're going to do 11 games, which will be 12 games in total,
0:15:27 > 0:15:30over a five-year period.
0:15:30 > 0:15:35What on earth makes you think that what you've got is worth £250,000?
0:15:35 > 0:15:39You need a reality check.
0:15:41 > 0:15:44The Dragons are used to taking risks too
0:15:44 > 0:15:46but not without a solid business plan in place.
0:15:46 > 0:15:47If I was pitching to you
0:15:47 > 0:15:51with a block of wood and a bloke running round with a zombie hat on
0:15:51 > 0:15:52and did a little forward roll
0:15:52 > 0:15:55and said, "Martin, I want £250,000 from you for that."
0:15:55 > 0:15:58I understand where you're coming from.
0:15:58 > 0:16:01There's no way I can get over to you how the game works...
0:16:01 > 0:16:05I got the game as soon as you came in, quite liked it actually.
0:16:05 > 0:16:09It's not going to be an investment I could see making money
0:16:09 > 0:16:13so, Martin, for that reason I'm not going to invest. I'm out.
0:16:18 > 0:16:21Often, the question for an entrepreneur entering the den
0:16:21 > 0:16:24is not can their business make money
0:16:24 > 0:16:28but can it make enough money to sustain a Dragon's investment?
0:16:28 > 0:16:30Next up, 25-year-old Umer Ashraf
0:16:30 > 0:16:33who thinks he has just the thing with an existing business
0:16:33 > 0:16:36he hopes can flourish as a franchise.
0:17:02 > 0:17:09My name is Umer Ashraf and I'm from a company called iCafe in Glasgow.
0:17:09 > 0:17:13We are quirky yet stylish coffee houses and internet cafes.
0:17:13 > 0:17:19Today, I'm here to raise £80,000 to help me launch our fourth unit
0:17:19 > 0:17:22which will be our flagship store.
0:17:22 > 0:17:25In return, I'd like to offer 30% of the overall business.
0:17:25 > 0:17:29Over the last three years, we've won many awards.
0:17:29 > 0:17:35In 2011, we increased our turnover to £548,000.
0:17:35 > 0:17:41I also started on a franchise package which we're halfway through
0:17:41 > 0:17:45so with your help today and my energy, enthusiasm and passion,
0:17:45 > 0:17:48I would like to take iCafe to a new level.
0:17:48 > 0:17:50Thank you very much for listening to me.
0:17:50 > 0:17:54Would anyone like to try some of our products or perhaps a coffee?
0:17:54 > 0:17:56- I'd like to try a coffee.- Sure.
0:18:01 > 0:18:02Coffee and cake.
0:18:02 > 0:18:0627-year-old Glaswegian Umer Ashraf clearly aims to tempt the Dragons
0:18:06 > 0:18:09into investing in his independent cafe chain.
0:18:09 > 0:18:12He needs £80,000 to help fund both his flagship store
0:18:12 > 0:18:18and franchise plans in return for a 30% stake of the company.
0:18:18 > 0:18:20Such a good brownie.
0:18:20 > 0:18:23Theo Paphitis is first to question the hospitable businessman.
0:18:25 > 0:18:30Umer, it all looks very good. Tell me how it started.
0:18:30 > 0:18:33I've always loved business since I was very young.
0:18:33 > 0:18:36My parents tell stories,
0:18:36 > 0:18:39I was eight years old selling friendship bands in school
0:18:39 > 0:18:44and had an online business aged 14 selling mobile phone accessories.
0:18:44 > 0:18:50Eventually, an opportunity came up and I was approached by a big company
0:18:50 > 0:18:55who were interested in a domain name and they offered me £250.
0:18:55 > 0:18:59I was going through my standard grades at the time
0:18:59 > 0:19:03wanting to see what university I want to apply to and everything else.
0:19:03 > 0:19:05The bottom line is you flogged it.
0:19:05 > 0:19:08You don't have to milk this, we can actually get to it.
0:19:08 > 0:19:12I ended up selling that for £18,500.
0:19:12 > 0:19:18iCafe actually was my final year university project.
0:19:18 > 0:19:21I had to come up with a business plan and once I graduated,
0:19:21 > 0:19:25I went over to the bank and said, "I would like to open this."
0:19:25 > 0:19:27"Have you got a site?" I said, "I do."
0:19:27 > 0:19:31- You started when?- 2005, I started.
0:19:31 > 0:19:33In 2006, I looked at another unit.
0:19:33 > 0:19:372006 was the second one.
0:19:37 > 0:19:41The third unit opened in 2010.
0:19:41 > 0:19:44The third one has a coffee-to-go at the front
0:19:44 > 0:19:47and a central kitchen at the back. It is actually a support unit.
0:19:47 > 0:19:50Umer, It's just a coffee shop, isn't it?
0:19:50 > 0:19:51Coffee houses, yeah.
0:19:51 > 0:19:54Is there anything special about this coffee shop?
0:19:54 > 0:19:56I'm losing the will to live.
0:19:56 > 0:19:58I'm sorry, I'm going to ask a few questions,
0:19:58 > 0:20:01then you can lose the will to live personally with him.
0:20:01 > 0:20:05This year, you're going to turn over what?
0:20:05 > 0:20:08£596,000.
0:20:08 > 0:20:13Profit will be 70 and I'm wanting to franchise it out
0:20:13 > 0:20:16- and that's what I'm here for. - Thank you. Fantastic.
0:20:19 > 0:20:22Verbose or just nervous?
0:20:22 > 0:20:24Umer's certainly made an impression in the den
0:20:24 > 0:20:27but it looks like Peter Jones is eager to get straight to the point.
0:20:31 > 0:20:33You've got three units at the moment.
0:20:33 > 0:20:40- Each, let's say, makes about £20,000 a year profit. Is that fair?- Yes.
0:20:41 > 0:20:45Now you want to take that model and turn it into a franchise.
0:20:47 > 0:20:48I'm a franchisee now,
0:20:48 > 0:20:50what do I have to pay you to open up that coffee bar?
0:20:50 > 0:20:56It will cost a total of 109,500.
0:20:56 > 0:20:59That's great, so for 110,000,
0:20:59 > 0:21:03I get from you a business that can make 20,000 a year.
0:21:03 > 0:21:08I don't know what day you were born on but I wasn't born yesterday.
0:21:08 > 0:21:12That's not a very attractive offer.
0:21:13 > 0:21:16I agree with you absolutely 100% but what I'd like to say
0:21:16 > 0:21:23is people wanting to open up a cafe on their own probably make a loss.
0:21:23 > 0:21:26You're not getting the point, it's not a good deal.
0:21:30 > 0:21:32Umer, I don't know why you're agreeing with Peter
0:21:32 > 0:21:35when Peter says the shop only makes 20,000.
0:21:36 > 0:21:40You've two shops and your projection this year, 70,000.
0:21:40 > 0:21:44- 70,000 between two shops is 35,000.- Three shops.
0:21:44 > 0:21:48No, two shops. The third shop is not a shop.
0:21:48 > 0:21:52The third shop is a little takeaway and a distribution depot
0:21:52 > 0:21:54so you've got to take that out.
0:21:54 > 0:21:58The third unit made around 1,600.
0:21:58 > 0:21:59Practically nothing.
0:22:02 > 0:22:06Do you seriously think anyone would pay you £110,000
0:22:06 > 0:22:08to buy one of your franchises?
0:22:08 > 0:22:11Two guys have been very interested in doing so
0:22:11 > 0:22:16and based on the first year, they would make £35,000.
0:22:19 > 0:22:23Not for the first time, the rival investors are divided
0:22:23 > 0:22:27about the attractiveness of the proposal on offer.
0:22:27 > 0:22:30Can Deborah Meaden make sense of it all?
0:22:31 > 0:22:33- Hello, I am Deborah.- Hi, Deborah.
0:22:33 > 0:22:35Who are these people with £100,000 to spare?
0:22:35 > 0:22:40OK, one of them is a manager for an electronics...
0:22:40 > 0:22:45How much do you think he's earning, because presumably he's got £100,000 in the bank?
0:22:45 > 0:22:46We haven't got to that stage.
0:22:46 > 0:22:50Do you think he's possibly earning more than, maybe, £30,000 per year?
0:22:50 > 0:22:53I wouldn't know that, Deborah, because...
0:22:53 > 0:22:56Well, if he IS earning £30,000 per year,
0:22:56 > 0:22:58you're offering them the opportunity
0:22:58 > 0:23:03to give up their secure job, give YOU £100,000
0:23:03 > 0:23:06to put it into a risky franchise for the ability to earn
0:23:06 > 0:23:09slightly more than they're earning at the moment.
0:23:09 > 0:23:12When I put it to you like that, does that sound like a good proposition?
0:23:12 > 0:23:15OK, but parts of that I don't agree with,
0:23:15 > 0:23:20because franchisee would be requiring only funds
0:23:20 > 0:23:24of around £40,000, the rest is through loan bar as leasing and...
0:23:24 > 0:23:26All right. Say £40,000 in the bank.
0:23:26 > 0:23:30You've got to think, "Who's this person who's going to take my franchise?"
0:23:30 > 0:23:33- I don't know, Deborah, because... - But you need to!
0:23:33 > 0:23:36Because that's your market! You need to imagine that person.
0:23:36 > 0:23:38- At the moment, I'm struggling.- OK.
0:23:38 > 0:23:43I feel that I have to defend, really, my position here.
0:23:43 > 0:23:46I've worked very hard to standardise all the systems for iCafe.
0:23:46 > 0:23:48But our franchise pack is not ready,
0:23:48 > 0:23:51- so I can't serve a half-cooked dish. - Umer.
0:23:51 > 0:23:55I truly believe it will go forward but...
0:23:55 > 0:23:59The truth is, you've got to think why would people do this?
0:23:59 > 0:24:03Who is that person? Where do I find them? What I sense
0:24:03 > 0:24:06is that you are quite busy batting off the questions,
0:24:06 > 0:24:10but not listening. I won't be investing,
0:24:10 > 0:24:13so I'm out.
0:24:15 > 0:24:19It's the first blow for the passionate entrepreneur as his franchise model
0:24:19 > 0:24:22receives short shrift from Deborah Meaden.
0:24:22 > 0:24:25Will Theo Paphitis take a different view?
0:24:26 > 0:24:28Umer.
0:24:28 > 0:24:31You've come in here with a model
0:24:31 > 0:24:36as to whether you run a franchise, whether you're going to open stores,
0:24:36 > 0:24:39you haven't come in here with a business plan.
0:24:40 > 0:24:44That is why at the moment, you are uninvestable.
0:24:46 > 0:24:50- So, I'm out.- Thank you, Theo.
0:24:50 > 0:24:53Umer, you've done incredibly well
0:24:53 > 0:24:56to create a business that makes money.
0:24:57 > 0:25:00But what you have done is you've stepped out of reality
0:25:00 > 0:25:06into a world of complete and utter fiction when it comes to business.
0:25:08 > 0:25:13You have no business that can possibly be franchised.
0:25:13 > 0:25:17This is totally uninvestable and I'm out.
0:25:17 > 0:25:20Thank you, Peter.
0:25:23 > 0:25:25- Right, may I speak?- Absolutely.
0:25:25 > 0:25:28And if I do so, will you listen?
0:25:28 > 0:25:31- You're the boss, you guys are the boss.- Right.
0:25:31 > 0:25:35To franchise something you've got to have a USP,
0:25:35 > 0:25:39you've got to have intellectual property to something
0:25:39 > 0:25:45and you've got to have testimonials that what you've got makes money
0:25:45 > 0:25:48and is temptation to somebody looking for investment.
0:25:48 > 0:25:52- Absolutely. - But you're not demonstrating that.
0:25:55 > 0:25:57Umer, I couldn't work with you.
0:25:58 > 0:26:01But that doesn't mean that I don't respect you
0:26:01 > 0:26:03for what you have achieved, because I do.
0:26:03 > 0:26:08I can't invest, so I got to say, I'm out.
0:26:10 > 0:26:13Strong words from the three Dragons.
0:26:13 > 0:26:15Now, only Duncan Bannatyne
0:26:15 > 0:26:20can save Umer from complete disaster in the den...
0:26:20 > 0:26:23OK, now I don't totally agree with Hilary.
0:26:23 > 0:26:29I've got a very successful franchise company that doesn't have all the things that she said.
0:26:30 > 0:26:34But you said you couldn't sell a franchise
0:26:34 > 0:26:37because you couldn't sell a half-cooked dinner.
0:26:37 > 0:26:39- But you've got a cooked dinner. - Yeah.
0:26:39 > 0:26:42- You've got two cooked dinners.- Yeah.
0:26:42 > 0:26:46Why don't you try and sell one of your existing coffee shops
0:26:46 > 0:26:49- as a franchise?- Cash flow, Duncan,
0:26:49 > 0:26:53because straightaway my cash flow would go from 100 percent,
0:26:53 > 0:26:55down to 6 percent.
0:26:55 > 0:27:01No, it won't. Because, the day you sell it, you'll open your new shop.
0:27:01 > 0:27:04So you could have your new shop lined up and ready to open,
0:27:04 > 0:27:08sell the franchise in your existing shop, and then open your new shop.
0:27:08 > 0:27:12- With the track record of...- The one you're selling, you've got track record.
0:27:12 > 0:27:15And you would prove to yourself, then, whether or not someone
0:27:15 > 0:27:18was willing to pay that money to buy the franchise.
0:27:24 > 0:27:27Very good advice. Thank you, Duncan.
0:27:34 > 0:27:36Well, you got a business.
0:27:36 > 0:27:39- And you got a business making a profit at £49,000.- Yes.
0:27:39 > 0:27:42- Was that before you took wages out? - No, no, no. After my wages.
0:27:42 > 0:27:44After you took your wages out?
0:27:44 > 0:27:49I take out £27,500 a year.
0:27:53 > 0:27:55I've got to make you an offer.
0:28:04 > 0:28:08I think you'd have to promise me that you would talk a lot less.
0:28:08 > 0:28:11Yes, I will try my utmost best.
0:28:12 > 0:28:15I want 49% of the company.
0:28:15 > 0:28:16For £80,000.
0:28:22 > 0:28:24It is not negotiable.
0:28:31 > 0:28:32Er... Can I take a minute?
0:28:51 > 0:28:55I would like to very much accept your offer, Duncan.
0:28:55 > 0:28:57- APPLAUSE - Good luck. - Thank you very much.
0:28:57 > 0:28:59Umer's done it.
0:28:59 > 0:29:02We're going to do well. We're going to make a little fortune, you and I.
0:29:02 > 0:29:05It only takes one Dragon investor to buy into your dreams,
0:29:05 > 0:29:09and he now has an experienced multimillionaire business partner.
0:29:18 > 0:29:21Each year, a number of products aimed at children are pitched
0:29:21 > 0:29:23to the Dragons, with some notable successes.
0:29:23 > 0:29:27Samantha Spake and Vanessa Harris from Cornwall were the latest
0:29:27 > 0:29:30to appeal to that market with their wooden toy business.
0:29:34 > 0:29:37Our first product is the rocker.
0:29:37 > 0:29:40A multifunctional wooden toy based on a Cornish fishing boat.
0:29:40 > 0:29:44The rocker can also become a play table with two seats, or a bridge.
0:29:44 > 0:29:49Then, on its side, it can become a play kitchen or a grand theatre.
0:29:50 > 0:29:54The product's versatility initially met with approval.
0:29:54 > 0:29:57They look fantastic. The question, of course,
0:29:57 > 0:29:58is how much will you sell it to me for?
0:29:58 > 0:30:02£250 for the main pack, £95 for the kitchen accessory pack,
0:30:02 > 0:30:05and £49 for the theatre accessory pack.
0:30:05 > 0:30:08But the costs raised a number of Dragon eyebrows.
0:30:09 > 0:30:13I love the design, I think you've got a problem with the price.
0:30:13 > 0:30:17You should perhaps look at moulded recyclable plastic
0:30:17 > 0:30:20rather than wood, so I'd go back to the drawing board.
0:30:20 > 0:30:24It's a wooden toy company! That's what they do!
0:30:24 > 0:30:25Not necessarily.
0:30:25 > 0:30:27With all due respect, Theo, Hilary is entitled to her opinion.
0:30:29 > 0:30:33In the end, Samantha and Vanessa were unable to escape that high retail price.
0:30:33 > 0:30:36You don't need to go back to your drawing board with the design,
0:30:36 > 0:30:39but you do with how you're going to sell it. And you've got to cut your margins.
0:30:39 > 0:30:41It won't work. You need to come down in price.
0:30:41 > 0:30:43I bet you when that's flat-packed,
0:30:43 > 0:30:46it does not look 250 quid's worth of product.
0:30:46 > 0:30:48I can see why somebody would want to buy it,
0:30:48 > 0:30:49but you've got to hit the price point.
0:30:49 > 0:30:52I won't be investing. So I'm out.
0:30:52 > 0:30:53-Thank you. -Thank you.
0:30:54 > 0:30:56So far tonight,
0:30:56 > 0:31:00only one entrepreneur has managed to secure the investment of a Dragon.
0:31:00 > 0:31:03We're going to do well. We're going to make a little fortune, you and I.
0:31:03 > 0:31:07To find out why Umer decided to accept Duncan Bannatyne's offer,
0:31:07 > 0:31:10press the red button at the end of the programme.
0:31:12 > 0:31:18As a professional toastmaster, Colin Bruton is used to speaking to lots of people,
0:31:18 > 0:31:21but the Dragons are a different proposition.
0:31:21 > 0:31:24And Colin has certainly got a different proposition for them today.
0:31:29 > 0:31:31Hello.
0:31:41 > 0:31:43Hello there.
0:31:43 > 0:31:47My name's Colin Bruton, and I'm the proud owner of Fellas Products Ltd.
0:31:47 > 0:31:53I am here today to ask for £60,000 for 20% of my business.
0:31:54 > 0:31:57Fellas is a British male grooming brand.
0:31:57 > 0:32:01My launch product was Fellas Wipes.
0:32:02 > 0:32:05They are intimate cleansing wipes for men.
0:32:05 > 0:32:09They are just a nice way of guys helping to keep their anatomy clean throughout the day.
0:32:09 > 0:32:12That's right, gentlemen - they are for your bits and pieces,
0:32:12 > 0:32:16but ladies, fear not - there will be no live demonstrations today.
0:32:22 > 0:32:26They are individually wrapped, free from alcohol
0:32:26 > 0:32:27and all artificial fragrances.
0:32:29 > 0:32:33I'm selling via my website around the world,
0:32:33 > 0:32:36and I think the investment will be good for any Dragon,
0:32:36 > 0:32:41and I'll hopefully give you a return of 750,000 over the next five years.
0:32:42 > 0:32:45Thank you very much for your time. Any questions, please?
0:32:45 > 0:32:48- Can I have a look at pack, please? - Of course you can, yes.
0:32:51 > 0:32:53If I give you three, and pass them down.
0:32:53 > 0:32:57A rather awkward pitch, for a number of reasons,
0:32:57 > 0:32:59from Staffordshire-based Colin Bruton.
0:32:59 > 0:33:03He needs £60,000 to fund his expansion plans for his male toiletry business.
0:33:04 > 0:33:06It's an interesting one for Deborah Meaden.
0:33:09 > 0:33:12Hello, Colin. I didn't wake up this morning expecting to be
0:33:12 > 0:33:16talking about gentlemen's intimate wipes.
0:33:16 > 0:33:21- It's interesting, isn't it?- Erm, yes. Let's talk about the business model.
0:33:21 > 0:33:22What are you turning over at the moment?
0:33:22 > 0:33:26I've been trading 11 months, and I've turned over £4,000.
0:33:26 > 0:33:30OK, and how much have you lost in that 11 months?
0:33:30 > 0:33:36I've put in £30,000 of my own money, and £20,000 of a loan.
0:33:36 > 0:33:40- And do have any cash at the moment? - Yes, I do. About £1,500.
0:33:40 > 0:33:45OK, so, is there anything in the product itself that is proprietary?
0:33:45 > 0:33:47No, I'm not asking... I'm asking a technical question, now.
0:33:47 > 0:33:49- Sure.- Not what does it look like.- OK.
0:33:49 > 0:33:53I'm asking you, is there something unique about the product itself?
0:33:53 > 0:33:58It's my own formula, which is a Chilean soap bark extract.
0:33:58 > 0:34:02OK, but is there anything you could protect in that, or is that just a readily...
0:34:02 > 0:34:04I can't protect it. The only thing I can protect is the branding,
0:34:04 > 0:34:06- which is what I've done throughout the EU.- OK.
0:34:10 > 0:34:13Colin has clearly thought about protecting the product,
0:34:13 > 0:34:16but what of the man behind the concept?
0:34:16 > 0:34:18Theo Paphitis wants to know.
0:34:20 > 0:34:21I'm Theo.
0:34:22 > 0:34:25- Who's Colin?- Who's Colin?- Yeah.
0:34:26 > 0:34:28I left school I was 16.
0:34:28 > 0:34:32I joined the Royal Navy, unfortunately it didn't work out for me.
0:34:32 > 0:34:34I actually got a medical discharge.
0:34:34 > 0:34:41- OK.- I set up my first company in 1997. I sold that in 2000.
0:34:41 > 0:34:45I had an idea for some wipes,
0:34:45 > 0:34:51and sold my house and used the money
0:34:51 > 0:34:53to invest in Fellas.
0:34:53 > 0:34:56Who else is out there competing in this market?
0:34:56 > 0:34:59Wingman is one company, but they are a different wipe.
0:34:59 > 0:35:02Colin, can I disagree with you? Because I do know the product.
0:35:02 > 0:35:04They look very similar. What's their turnover?
0:35:04 > 0:35:06I don't know. I don't know that.
0:35:06 > 0:35:09But they don't... I don't see them as a competitor.
0:35:09 > 0:35:12So, you felt there was enough market for both of you?
0:35:12 > 0:35:14- Yes.- But you don't know how well they're doing,
0:35:14 > 0:35:17whether they've found a market, whether they're successful,
0:35:17 > 0:35:20or they're not successful, or there's no market at all.
0:35:22 > 0:35:24I've gained far too much interest for there not to be market.
0:35:24 > 0:35:28- With all due respect, you've turned over £4,000.- I understand that.
0:35:28 > 0:35:34- That's not a lot of interest. - I know it's not, but I see my biggest market is actually the States.
0:35:34 > 0:35:39- OK.- I'm just about to sign a deal for the...
0:35:39 > 0:35:44Two guys in Florida to actually...
0:35:44 > 0:35:48Their initial order of 23,000.
0:35:52 > 0:35:55The uncomfortable atmosphere shows no sign of abating,
0:35:55 > 0:35:59but will the revelation of a sizeable order change all that?
0:35:59 > 0:36:02Duncan Bannatyne has something on his mind.
0:36:04 > 0:36:08Colin, earlier this year I spent a week living in a tent on a mountain
0:36:08 > 0:36:11where there was no showers, and we washed ourselves
0:36:11 > 0:36:15- using the same wipes you use on a baby.- Mmm.
0:36:15 > 0:36:18But, you know, I tell you, very difficult to use these
0:36:18 > 0:36:22when every time you use them you have to open them individually.
0:36:22 > 0:36:26So, I want you to tell me where the customer is who needs
0:36:26 > 0:36:31an individually wrapped one of these to use in a specific situation.
0:36:31 > 0:36:36I have truck drivers who buy them from me who say they use them when they've been driving.
0:36:36 > 0:36:39- So, the truck driver... - I have...- Wait a minute, Colin.
0:36:39 > 0:36:42- The truck driver is in his truck. - I have...- Wait a minute, let me...
0:36:42 > 0:36:45He can use, in his truck, some of the big bags.
0:36:45 > 0:36:48He doesn't have to have a single one.
0:36:48 > 0:36:50- The whole idea is that they are mobile.- You see, Colin...
0:36:50 > 0:36:52- Gentlemen...- Colin, Colin. Let me tell you something.
0:36:52 > 0:36:54Let me tell you something.
0:36:54 > 0:36:57When you sell a product,
0:36:57 > 0:37:00you have to listen to the customer who's going to buy the product.
0:37:00 > 0:37:04- Exactly.- Now, you're not listening to me, and I buy this product.
0:37:07 > 0:37:11Colin, why on earth did you sell your house without
0:37:11 > 0:37:16studying the market, studying what market share you could gain?
0:37:16 > 0:37:18I don't understand.
0:37:18 > 0:37:20You might as well have taken that money and ripped it up.
0:37:20 > 0:37:22No, I don't think so at all.
0:37:22 > 0:37:25From the really positive conversations I'm having,
0:37:25 > 0:37:28I think, you know, I'm pretty sure I'm going to get this order.
0:37:28 > 0:37:33I've got, you know, e-mails to prove that the order is going to come through from the States.
0:37:33 > 0:37:38I've launched a brand-new brand, and a brand-new concept, so I understand...
0:37:38 > 0:37:40It is NOT a brand-new concept.
0:37:40 > 0:37:44I were using baby wipes on my son's bits and bobs 25 years ago.
0:37:44 > 0:37:46For...
0:37:50 > 0:37:52I'm sorry, I disagree. I just disagree.
0:37:52 > 0:37:55- Because they are, there are... - All I can say, Colin, is...
0:37:55 > 0:37:58- Yeah, but how do you carry, how does a man...- Oh, Colin.
0:37:58 > 0:38:02..a young man carry a bag of baby wipes around with him?
0:38:02 > 0:38:05I've got to say, you look very presentable,
0:38:05 > 0:38:08I think your brand is brilliant. Good brand name.
0:38:08 > 0:38:12But you clearly have done no research on this market.
0:38:14 > 0:38:16I'm out.
0:38:19 > 0:38:24Perhaps inevitably, Colin receives a first blow to his investment dreams.
0:38:24 > 0:38:27And it doesn't look like his luck is going to change with Peter Jones.
0:38:31 > 0:38:34Colin, I think if you manage to get the order,
0:38:34 > 0:38:37and you get potential orders after that,
0:38:37 > 0:38:42it doesn't necessarily make it a business that is investable.
0:38:44 > 0:38:48And I'm wishing and hoping that you don't get that order,
0:38:48 > 0:38:52because I think it's going to make you think that you're onto something.
0:38:53 > 0:38:57And from Theo's questioning, I'm sitting here thinking
0:38:57 > 0:38:59you're probably too late to market,
0:38:59 > 0:39:03because your first move or advantage has been taken away from you.
0:39:03 > 0:39:04I'm sorry, I disagree.
0:39:06 > 0:39:09That's why it makes it a totally uninvestable opportunity.
0:39:13 > 0:39:14- And that's why I'm out.- OK.
0:39:17 > 0:39:20You know, sometimes people find it hard to start a business.
0:39:20 > 0:39:27But something that is much, much harder is to admit to yourself that you've made a huge mistake.
0:39:27 > 0:39:32The product doesn't sell, it won't sell, and only you are preventing yourself
0:39:32 > 0:39:36from moving on to do something else, and you've got to really do that.
0:39:36 > 0:39:40I'm sorry, but this is not a product that's going to make any money.
0:39:40 > 0:39:43So I'm not going to invest. I'm out.
0:39:44 > 0:39:48Two more Dragons out, and despite Colin's fervent belief in his product,
0:39:48 > 0:39:53he can't seem to get that across to the experienced investors.
0:39:53 > 0:39:56Will Deborah Meaden be more understanding?
0:39:56 > 0:39:59I would like you to do one thing for me.
0:39:59 > 0:40:04I would like you to absolutely promise me that if this order
0:40:04 > 0:40:09- does not come through, you will seriously consider stopping this business.- Yeah, yeah.
0:40:11 > 0:40:13I appreciate that. And I do understand.
0:40:13 > 0:40:16And I understand that you are saying it for genuine reasons.
0:40:16 > 0:40:19- I won't be investing. - I understand.- So, I'm out.
0:40:21 > 0:40:26Let me just tell you, rule one in starting a business is,
0:40:26 > 0:40:28do your homework.
0:40:28 > 0:40:31Understand the market.
0:40:31 > 0:40:3750 percent of all new start-ups fail incredibly quickly
0:40:37 > 0:40:42because people, and I use the word carefully, are delusional.
0:40:43 > 0:40:48You need to stop and listen.
0:40:48 > 0:40:51You're not investable, this is not something I can invest in,
0:40:51 > 0:40:55so I'm going to help you out by saying, I'm out.
0:40:55 > 0:40:56OK.
0:40:59 > 0:41:03Thank you all for your time. Thank you.
0:41:03 > 0:41:07It's a case of tough love for Colin. He got no cash,
0:41:07 > 0:41:10but he did receive some genuine words of warning from the Dragons.
0:41:10 > 0:41:12He leaves with nothing.
0:41:18 > 0:41:23Others who tried and failed in the Den included Joanna and Dean Barnes,
0:41:23 > 0:41:26from Surrey, who had an innovative solution to a common DIY problem.
0:41:27 > 0:41:31The Daddy is a dust and debris eliminator.
0:41:33 > 0:41:37As you can see, all the dust has been forced to the base.
0:41:37 > 0:41:40Dean will now demonstrate what happens
0:41:40 > 0:41:44when you don't use the product.
0:41:45 > 0:41:48You've just ruined a perfectly good suit, Dean!
0:41:49 > 0:41:51Before even getting down to business,
0:41:51 > 0:41:55the couple's invention caused some disagreement in the den.
0:41:55 > 0:41:58It can't work on walls. You're just going to drop straight down.
0:41:58 > 0:42:02- You're talking rubbish. - Dean, tell me if I'm right, Dean.
0:42:02 > 0:42:05You can use it on a fixing for a wall. It would work, to a fashion.
0:42:05 > 0:42:08The dust would just drop down.
0:42:08 > 0:42:11If you sealed it against the wall, it would work.
0:42:11 > 0:42:14The den's DIY expert may have backed the product,
0:42:14 > 0:42:16but that's not the same as backing the business.
0:42:18 > 0:42:23- How many have you sold to retailers? - We have sold 17,000 units.
0:42:23 > 0:42:24Yeah, what would the net profits be?
0:42:24 > 0:42:28- £28,000.- Are these figures before you take salaries?- Yes.
0:42:28 > 0:42:31I think it's a really good product,
0:42:31 > 0:42:34but it's just such a small business,
0:42:34 > 0:42:36it can't take an investment at the moment,
0:42:36 > 0:42:39- so I've got to say, I'm out. - Thank you.
0:42:39 > 0:42:42Next in was darts fan, Barry Steptoe,
0:42:42 > 0:42:45who thought he had solved a problem of a very different kind.
0:42:47 > 0:42:50The oche is the place a person stands when they're throwing darts,
0:42:50 > 0:42:56and I have basically invented the first foldaway, solid, portable oche.
0:42:56 > 0:42:59- Can I have one quick go?- Sure.
0:43:05 > 0:43:09No treble top for Peter Jones, but Barry did hit the bull's-eye
0:43:09 > 0:43:12when it came to his approach to business.
0:43:12 > 0:43:15Barry, how much have you actually invested so far?
0:43:15 > 0:43:18- A couple of hundred pounds to get it going.- Tell me about the patent.
0:43:18 > 0:43:19I did that myself.
0:43:19 > 0:43:23- DIY job?- Yeah. - How much did that cost you?- £242.
0:43:23 > 0:43:27It was complicated, but if you put your mind to it, it can be done.
0:43:27 > 0:43:30Well, I have to tell you, I think that's fantastic,
0:43:30 > 0:43:31I hope it sends a message,
0:43:31 > 0:43:34that we can save millions of pounds on patent lawyers
0:43:34 > 0:43:37all around the world. Great!
0:43:37 > 0:43:40In the end, Barry charmed the Dragons,
0:43:40 > 0:43:43but he couldn't convince them to part with their cash.
0:43:43 > 0:43:46I was brought up in a pub, and they used to have the
0:43:46 > 0:43:49rubber strips actually nailed into the floor.
0:43:49 > 0:43:51To be honest, that was adequate.
0:43:51 > 0:43:54Valuing what you've got at half million pounds,
0:43:54 > 0:43:57I'd want it to come with the pub that your product is in.
0:43:57 > 0:44:01What a great little cottage industry, and good luck to you,
0:44:01 > 0:44:03- but I'm not going to invest, and I'm saying, I'm out.- Thank you.
0:44:07 > 0:44:10When approaching investors, it's crucial to offer them
0:44:10 > 0:44:13a big enough slice of a business to get them excited,
0:44:13 > 0:44:16while at the same time, keeping enough back for yourself.
0:44:16 > 0:44:19It's a tricky balance, one that online entrepreneur
0:44:19 > 0:44:23Ben Hardyment hopes he's got right as he faces the Dragons.
0:44:53 > 0:44:58My name is Ben Hardyment and I'm here today looking for £250,000 worth
0:44:58 > 0:45:03of investment in return for a 7.5 percent equity stake in my company.
0:45:03 > 0:45:05Zapper is a website where you can enter barcodes
0:45:05 > 0:45:10from the backs of books, CDs, DVDs and computer games,
0:45:10 > 0:45:13in return for instant cash valuations.
0:45:13 > 0:45:16Once you're happy, you would simply complete the trade,
0:45:16 > 0:45:19and then we would post you your cheque.
0:45:19 > 0:45:24Since our launch in November 2011, we have grown to over 5,000 customers,
0:45:24 > 0:45:30and currently enjoy monthly revenues in the region of £150,000.
0:45:30 > 0:45:33I've brought here today 58 items,
0:45:33 > 0:45:39and the onward retail value of these goods is approximately £250,
0:45:39 > 0:45:43but we would pay the customer approximately £40 for them.
0:45:43 > 0:45:48And inherent in these is a net profit in the region of £20.
0:45:49 > 0:45:53Erm, so I would now invite your questions.
0:45:53 > 0:45:55Thank you for listening to my pitch.
0:45:59 > 0:46:02A somewhat sober pitch from Ben Hardyment,
0:46:02 > 0:46:05whose website offers the chance to sell your unwanted CDs,
0:46:05 > 0:46:09books and video games for a share of the profits.
0:46:09 > 0:46:10He needs a sizeable
0:46:10 > 0:46:13cash injection of a quarter of a million pounds
0:46:13 > 0:46:17for a rather precise 7.5 percent of the company.
0:46:18 > 0:46:22Duncan Bannatyne is first to question the ambitious entrepreneur.
0:46:24 > 0:46:26I want to talk about the business.
0:46:26 > 0:46:31I did a quick calculation, £250,000 for a 7.5 percent,
0:46:31 > 0:46:39that comes to a valuation of £3,333,333.33p.
0:46:39 > 0:46:43- Yeah.- OK, so what I need to do is find out why.
0:46:43 > 0:46:47So, 2012, you worked on a projection.
0:46:47 > 0:46:52It was 1.1 million, and the net profit, around 35,000.
0:46:52 > 0:46:56In 2013, the turnover is projected at 8.3 million,
0:46:56 > 0:46:59net profit, 660,000,
0:46:59 > 0:47:05and 2014, 23 million, net profit, 2.1.
0:47:08 > 0:47:10Well, you know, if you match these projections,
0:47:10 > 0:47:16you could well be worth 3,333,333.33p.
0:47:16 > 0:47:20- That's why I've come here with that conviction.- How do you know you're going to make them?
0:47:20 > 0:47:22There's no shortage of inventory in houses,
0:47:22 > 0:47:25and the last six months' turnover has been in the region of
0:47:25 > 0:47:28£600,000 in total.
0:47:33 > 0:47:37A confident rebuttal by Ben to the age-old issue of valuation.
0:47:37 > 0:47:41But has it satisfied Deborah Meaden?
0:47:41 > 0:47:45- Ben, hi.- Hi, Deborah. - How much money have you put in?
0:47:45 > 0:47:50- I've properly put in about 50,000 in. - Do you have other investors?
0:47:50 > 0:47:53We have three shareholders at ten percent each.
0:47:53 > 0:47:56And how much did they put into the business?
0:47:56 > 0:47:58They put in 50,000 in collectively.
0:47:58 > 0:48:01So, 17,000 each to give them ten percent?
0:48:04 > 0:48:08So, how come these three investors put in £50,000,
0:48:08 > 0:48:12and now suddenly we have to buy in at a later stage at £250,000?
0:48:13 > 0:48:17Well, the only easy answer is that I'd put myself in a vulnerable
0:48:17 > 0:48:21position by not organising the raising of finance in
0:48:21 > 0:48:24a timely fashion, so I bought in three minority shareholders,
0:48:24 > 0:48:27who I knew would in a mentoring capacity
0:48:27 > 0:48:30help me in various different ways.
0:48:30 > 0:48:33- OK, are you out of the woods now? - Most definitely.
0:48:33 > 0:48:39The main difference now is that we've ridden that classic cash flow curve.
0:48:39 > 0:48:41How much cash have you got in the business now?
0:48:41 > 0:48:45We're running an average balance of around £8,000 or £9,000.
0:48:45 > 0:48:48You would kind of say there's not a lot of cash in the business at the moment?
0:48:48 > 0:48:51- No, that's right.- So, had you think that answers the question?
0:48:51 > 0:48:53The only easy answer...
0:48:53 > 0:48:55That has not bridged the gap between their valuation
0:48:55 > 0:48:57and this valuation, has it?
0:49:00 > 0:49:02The figures that I've given you are,
0:49:02 > 0:49:05I will confess, assisted by an injection of investment.
0:49:05 > 0:49:07So, I'm having to pay for the difference
0:49:07 > 0:49:09that I'm going to make for the business.
0:49:09 > 0:49:14I've got to give you £250,000, make a big difference to this business,
0:49:14 > 0:49:16to make it worth the money that you're charging me for now.
0:49:16 > 0:49:19That doesn't sound like a good way of me spending my money.
0:49:19 > 0:49:21Well, if I had an opportunity to show you
0:49:21 > 0:49:23the projections of the business...
0:49:23 > 0:49:26I'm sorry, this is very frustrating, and I'll be perfectly honest,
0:49:26 > 0:49:30I'm actually quite insulted that you clearly think
0:49:30 > 0:49:34those other investors are of a different level to here.
0:49:34 > 0:49:38Your company was being valued at £160,000.
0:49:40 > 0:49:42You now value it at 3.3 million.
0:49:44 > 0:49:47I can't possibly invest in something like this, so, I'm out.
0:49:51 > 0:49:54Instant rejection from Peter Jones,
0:49:54 > 0:49:58as the surefooted businessman loses his first Dragon.
0:49:58 > 0:50:01And Hilary Devey is not looking impressed either.
0:50:04 > 0:50:11- I think Peter's right, and I equally feel insulted.- OK.
0:50:11 > 0:50:12I'm sorry to hear you say that.
0:50:12 > 0:50:17Yeah, so my next words are, "Ben, I'm out."
0:50:19 > 0:50:23- Ben, can I tell you where I am? - Yes, indeed.
0:50:23 > 0:50:27I have to say it is not a good strategy to come in front of
0:50:27 > 0:50:29five other investors and say,
0:50:29 > 0:50:32"We value you so much less than the other investors,
0:50:32 > 0:50:36"that for the same percentage, we're going to charge you £250,000."
0:50:36 > 0:50:40That is not a good strategy when you're asking for investment.
0:50:40 > 0:50:43And sometimes, you just lose investment
0:50:43 > 0:50:47because you screw it up, and you just did. I'm out.
0:50:53 > 0:50:56Ben, how do you think it's going so far?
0:50:57 > 0:51:00Pretty catastrophic.
0:51:01 > 0:51:03I quite like the model.
0:51:03 > 0:51:10You know, have the three Dragons who've gone out missed something?
0:51:10 > 0:51:16I think they've missed the motivation of an entrepreneur who's spent
0:51:16 > 0:51:22the last eight years building internet businesses.
0:51:22 > 0:51:24Just a little bit of background, briefly.
0:51:24 > 0:51:26My previous business was Webflix.
0:51:26 > 0:51:31I mean, I started that business in the bedroom of my mum's house.
0:51:31 > 0:51:36We sold our customers, at a later date, to our big competitor.
0:51:36 > 0:51:38- What was the amount?- It was 150,000.
0:51:38 > 0:51:45That's great. So, if I invest £250,000 in this, what is my exit?
0:51:47 > 0:51:51Well, we've had interest from a big American company.
0:51:51 > 0:51:53It was a bit early for us,
0:51:53 > 0:51:57but there are potential trade sale exits for this business.
0:52:00 > 0:52:04I wish you'd come in and asked for less money, Ben.
0:52:04 > 0:52:08The valuation's wrong. So therefore, I got to say, I'm sorry, I'm out.
0:52:11 > 0:52:14Ben's business revelations restore some credibility to his pitch,
0:52:14 > 0:52:20but the result is still the same, and now four Dragons are out.
0:52:20 > 0:52:25However, Theo Paphitis has been unusually quiet.
0:52:26 > 0:52:32Now, Ben, I like the whole concept of it.
0:52:34 > 0:52:36I'm a retailer, I know about retailing.
0:52:36 > 0:52:39I see the future in exactly where you're going.
0:52:39 > 0:52:43I'm just wondering whether you're just going to run out of steam?
0:52:43 > 0:52:46One of the main reasons you can have confidence is that
0:52:46 > 0:52:50we've developed the business to scale in extraordinary ways.
0:52:50 > 0:52:53And it's all fully tested, robust technology.
0:52:53 > 0:52:57Right. So I've got 250,000 quid in my pocket,
0:52:57 > 0:53:00what are you going to give me in return?
0:53:00 > 0:53:04At least a tenfold return on that investment in three years.
0:53:04 > 0:53:08One of the things I can demonstrate to you is that my nearest competitor,
0:53:08 > 0:53:12Music Magpie, they've been doing it since 2008,
0:53:12 > 0:53:15and now generate something in the region of
0:53:15 > 0:53:17100 million a year in revenue.
0:53:17 > 0:53:19There's no shortage of people wanting to de-clutter.
0:53:21 > 0:53:26But the problem is, you gave 30 percent for £50,000.
0:53:28 > 0:53:31And you're asking for such a huge amount here.
0:53:31 > 0:53:35I still believe it to be a not unreasonable
0:53:35 > 0:53:41valuation at 3.5 million, but I would be prepared to obviously
0:53:41 > 0:53:44move on that valuation, and therefore the percentage.
0:53:44 > 0:53:46What would you offer me?
0:53:46 > 0:53:50I'd offer you 15 percent.
0:53:50 > 0:53:52OK.
0:53:58 > 0:54:00I'm going to make you an offer...
0:54:04 > 0:54:07..of the full £250,000.
0:54:11 > 0:54:13But I'm going to be wanting...
0:54:13 > 0:54:14..30 percent.
0:54:23 > 0:54:28I would be prepared to offer you 20 percent
0:54:28 > 0:54:32for that amount, if you would agree.
0:54:32 > 0:54:35Believe you me, you don't know how much it hurts to offer you
0:54:35 > 0:54:43£250,000 for the same amount as somebody else paid £50,000.
0:54:49 > 0:54:53Am I in a position to consult with Matt, my business partner?
0:54:53 > 0:54:54Yeah, I think, absolutely.
0:54:58 > 0:55:03A tense exchange, but Ben finally gets the offer he badly needs.
0:55:03 > 0:55:07But at four times the equity he initially wanted to give away.
0:55:08 > 0:55:12Will his business partner be able to negotiate a better deal?
0:55:13 > 0:55:15Hello, Matt, I'm Theo.
0:55:18 > 0:55:20I just made Ben an offer,
0:55:22 > 0:55:26and Ben feels it's important he discusses it with you.
0:55:26 > 0:55:27Of course, yeah.
0:55:27 > 0:55:31Before I tell you what that offer is, what I'd like to know,
0:55:33 > 0:55:35who is Matt?
0:55:35 > 0:55:41Oh, well, erm, I worked for British Aerospace for a while,
0:55:41 > 0:55:46and then I became a web developer, and then I moved on,
0:55:46 > 0:55:48I became a database expert.
0:55:48 > 0:55:53I've been working with Ben for six years now.
0:55:53 > 0:55:58I set up all the technology, design all the processes,
0:55:58 > 0:56:00and make sure everything works together.
0:56:00 > 0:56:06Well, let me just say to you, I have asked for 30 percent.
0:56:10 > 0:56:14- Do you want to have a discussion about?- Might be a good idea.
0:56:23 > 0:56:28(WHISPERS) Thing is, it's not gone very well, I've been slaughtered.
0:56:28 > 0:56:34What do you think we should do? So, we would have 40 percent.
0:56:34 > 0:56:39- Less than half, control of the company.- Yeah.- That's bad for us.
0:56:39 > 0:56:46OK, we'll go to 25, all or nothing. OK, let's go back.
0:56:53 > 0:56:57It would involve extra dilution of my own shares,
0:56:57 > 0:57:01but would you be prepared to move to 25 percent?
0:57:01 > 0:57:05I would be prepared to stay at 30 percent.
0:57:09 > 0:57:13We should consider not just the money,
0:57:13 > 0:57:17but what Theo could bring in, in terms of his contacts, his networks.
0:57:20 > 0:57:22What do you feel?
0:57:25 > 0:57:28I feel we should accept the offer.
0:57:28 > 0:57:31OK.
0:57:31 > 0:57:35- Have we got a deal? - We've got a deal.- We've got a deal.
0:57:36 > 0:57:40- Ben and Matt have done it. - Excellent.
0:57:40 > 0:57:42The cash injection cost them more equity, but they leave
0:57:42 > 0:57:47with a highly experienced Dragon investor on board.
0:58:00 > 0:58:03So, Ben and Matt have bagged the biggest investment
0:58:03 > 0:58:06ever from a single Dragon.
0:58:06 > 0:58:09Of course, it must have been frustrating that Theo Paphitis
0:58:09 > 0:58:12wouldn't budge in his negotiations, but they've got their deal,
0:58:12 > 0:58:16and they've made a little piece of den history in the process.
0:58:16 > 0:58:20To hear more from the entrepreneurs about what it was like
0:58:20 > 0:58:23to pitch in the den, press the red button now.
0:58:23 > 0:58:25You can also visit our website:
0:58:25 > 0:58:28bbc.co.uk/dragonsden
0:58:28 > 0:58:30Goodbye.
0:58:30 > 0:58:32Next week in the den:
0:58:32 > 0:58:38There is somewhere a hidden door to a world you've never seen before.
0:58:38 > 0:58:41Business is absolutely simple, people complicate business.
0:58:41 > 0:58:45- I don't know why you're laughing at mine, Theo?- Don't laugh at me!
0:58:45 > 0:58:47Oh, my God, they don't look very well. Can you hear me?
0:58:47 > 0:58:51I'm trying to think of the pitch, you're standing there with a supermarket buyer,
0:58:51 > 0:58:56- saying, "I'm proud of my grandad." - £240,000?
0:58:56 > 0:58:59One of us is barking mad.
0:58:59 > 0:59:01It's not me.
0:59:17 > 0:59:20Subtitles by Red Bee Media Ltd