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.

-Passion doesn't create profit.

-If I invested in this, I wouldn't be doing what you're doing.

There's been some great inventions in this world which have made no money.

You don't have the experience, you don't have any brand.

It isn't making money. You value that business at one million.

I've got confidence in you guys, and in the product,

so I'm going to make you an offer.

The multi-millionaire investors have each built up their fortunes

from scratch.

Hotel and health club owner Duncan Bannatyne.

Leisure industry expert Deborah Meaden.

Retail magnate Theo Paphitis.

Telecoms giant Peter Jones.

And new Dragon Hilary Devey,

who made her millions in the haulage industry.

The Dragons have the credentials, the contacts, the commitments 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 the Dragons' Den.

Entrepreneurs have come here looking to secure an all-important cash injection for their business.

There's just one obstacle -

persuading our five multi-millionaire Dragons to invest.

The best will come away with the backing they need,

the rest leave with nothing.

Our first entrepreneurs, husband and wife team Meena and Tim Carlya

and inventor Tricia Tierney

have already established sales in the US with their product.

But will the Dragons foresee success this side of the Atlantic?

Hello, Dragons!

Hello!

Hello, Dragons.

Hello. My name is Meena. I'm very pleased to be here today.

I seek £75,000 in return of 20% shares in my company.

I'm Tim Carlya, Meena's husband, and operational manager for the Rascal Dog Litter Box Company.

I'm Tricia Tierney, owner of the USA division of the Rascal Dog Litter Box and creator of the product.

-Meena, who needs a Rascal Dog Litter Box?

-Good question.

Anyone who owns a dog. As you see, I love dogs.

Every dog owner is looking for a simple solution to their dog's toilet needs.

Rascal Litter Box is the answer to those problems.

Let's face it,

I cannot hold my bladder and it's a bit harsh to expect your dog to hold his bladder for hours on end.

-Right?

-Exactly. If I could take a minute to show you the product.

The box can be used three different ways. That's the beauty of it.

First, the sides, for male dogs, which contain the mess in the box.

It can be used with the machine-washable grass pad.

It also has a pet-friendly grate if you just want to use the grate.

It also has a laundry bag to machine-wash the grass in.

We had tremendous sales, phenomenal sales of 480,000

-in just 27 months.

-OK, that's about it. We hope to get you on board today.

Thank you for your time. We're ready for any questions.

A lively but somewhat unruly pitch from Staffordshire-based Meena and Tim Carlya

and their business partner Tricia Tierney.

In return for a cash injection of £75,000

they're willing to give away a 20% stake in their new toilet-training system for dogs.

Hilary Devey is first to question the trio.

Meena, I'm Hilary. I love dogs and I've got lots of them.

-You and me both!

-I have a problem with two Teacup Yorkies.

When I take them for a walk, they won't actually do it outside because they're shy.

So how would this help?

Very good question, Hilary.

-Tricia?

-This is a training spray that comes with it.

Every dog wants to be the top dog.

That's why fire hydrants are popular. They all want to go on top of each other.

-So this product mimics that.

-Right. OK.

What is so different about this product?

There's no real competition. There's three different ways you can use it.

You can have the pet-friendly grate here. All the urine and everything...

No, what I'm trying to do is - what is the difference other than it's a piece of...

One is the training spray...

You can buy spray that attracts them to the same spot.

-Yes.

-Meena, so that spray's irrelevant.

-But that's... Yes. Sorry.

-You haven't invented that spray, correct?

-The big selling...

-Am I correct?

Can you use that spray on that mat or box, anywhere you want?

-Yes...

-So that spray is not the answer. It's not what you're selling.

-But it's...

-It's included.

-Meena, can I just say talking and talking and talking and talking

-over a question...

-OK.

-..doesn't make you right.

An uncomfortable start for the excitable entrepreneurs.

Can they show more measure under the scrutiny of Theo Paphitis?

-There's two questions I'd like answered.

-Sure.

What's going to be the turnover and profit to 2011?

I think it should be in the region of ten to £15,000.

No, the question was the turnover and the profit.

Sure.

-Turnover.

-The turnover should be about £100,000.

So turnover £100,000.

Yes or no?

No, I think I've got my figures slightly wrong.

-Just take a deep breath and think about it.

-Take a deep breath.

-You've got your figures slightly wrong.

-What's the turnover and what's the profit?

2011 the turnover should be about £30,000.

And we made a paper loss of £13,000

against the... Obviously - sorry - against the investment we put in.

Now I'm going to allow you to make a forecast going forward.

-It should be about £100,000.

-Turnover is...

-Give him time to talk.

-And profit of?

-About 25... 20 to - about 20,000.

-The turnover was 200,000 and profit was 100,000. We've been speaking...

-No, no.

That's what I asked him. The turnover was 200,000? He said 100,000 just now.

-He's getting his figures mixed up.

-Shall I ignore you?

A little bit, I think.

Things don't bode well for the trio as their financial acumen is called into question.

Will Deborah Meaden offer them an opportunity to salvage their pitch?

Meena, Tim, Trish, I don't like the idea. I think a pad is much better.

Pads should be used for training your dog to eventually go outside.

The feedback we're getting from our customers, testimonials,

we know we haven't even gone into retail yet...

OK, I phrase it in a different way.

Often people take their dogs for an exercise

and if you just say, "We won't take the dogs for exercise, we'll just leave that in the corner.

-"We don't need to take our dog out."

-In the UK and Europe there is no similar product with...

Meena, I've got a horrible feeling you're going to say what you were just about to say.

-Can't you see the potential...

-A lot of them are...

-Because...

-Meena, don't say anything.

Tim, sometimes I feel I've got a little voice in my head. You don't have a voice. Your voice is Meena.

-Not really...

-Talking to you all the time.

-No, I do love her and obviously she's good at something.

-Tim, she's lovely. Can I say I think Meena's lovely.

-Thank you.

It's very nice that you're defending her, but she would drive me potty!

-I'm not that bad!

-I do agree. I do agree.

Thank you!

-Thank you.

-I'm not always speaking. I'm not that bad.

-You're doing it again!

-I am excited about it. Look at the sales...

-Meena, stop. I need to tell you I won't be investing.

-I'm out.

-Thank you, Deborah.

The likeable characters may have made an impact in the den,

but so far it's not been a productive one.

And now Duncan Bannatyne has made up his mind too.

Let me tell you where I am, Tricia, Tim, Meena. Look,

some people will buy this. Some people will like this.

But not the majority and not what you said, "Every dog owner".

Believe me, there are people who would find this very useful...

-There are people who would find that useful...

-We get a lot of orders in and out of London

-that haven't got...

-Meena.

-..back yards...

-Meena!

When we're in the house and the dog wants to go to the toilet, the dog waits

because it's got a bladder designed differently from human bladders.

It's like a family member. Why wouldn't you have a toilet-trained dog at home?

-Do you see no purpose...

-Thank you very much. Thank you very much!

Thank you! Thank you very much. Thank you very much! I am out!

Thank you.

-I don't always speak that much. It's nerves.

-It's just nerves.

-Shh!

-Meena.

-OK.

-You've said too much.

I personally wouldn't have one of those in my home.

What if I had a dinner party and that stuck in the corner!

-It would stink! I like a nice home.

-I really want to make it clear

I would in no way want the dogs to just get trained to this.

I'm not going into another diatribe, Meena. Passion doesn't create profit.

I wish you luck on your journey

but I'm out.

The cordial atmosphere disappears and frustration comes to the fore.

With just two Dragons remaining,

will Meena, Tim and Tricia find salvation from Peter Jones?

Tricia, unfortunately, Tim and Meena have let you down as an inventor of this product.

The only person that's going to lose is you

-because it's your product and your business.

-Right.

So you've failed by allowing two people to represent your product.

-They talked more than you, and that was wrong.

-Because they're the UK company.

No matter. This is your product and your life.

Sit down with them and work out how you can make this happen.

Because they will be successful with their passion and enthusiasm.

You need to put that together.

At the moment, you're totally uninvestable.

That's why I can't possibly give my money over.

-So I'm declaring myself out.

-Thank you.

We've been talking about this for God knows how long

and I still haven't understood

what the dog's expected to do.

When it does it on that grass,

-what do I do?

-You can rinse it off outside. You can rinse it off.

Is it me, but that sounds like a right mess!

-The laundry bag is there as well.

-I'm not going to stick that in Mrs P's washing machine!

She'll go mental!

-It gives you an option...

-Tim, it just wouldn't happen.

-This is not for me. So I'm going to say...

-But please do...

-Tim!

What I'm saying is actual people have...

-DEBORAH:

-There you go, Theo. It's clear!

Has anybody got a white flag? I surrender! It's relentless.

I...am...

OUT!

OK.

-Thank you.

-Good luck, guys.

An opportunity missed.

The trio never came close to bagging an investor.

They leave with nothing.

Hang on, what's that I can hear?

It's silence!

As much as you try to rehearse the pitch,

when you're in there and your nerves are frazzed,

-it's easy to get off a little bit.

-The figures got mixed up and that put them off a little.

But I might have got over-enthusiastic or nervous.

I kind of gave them a headache!

The Dragons expect to see a wide range of entrepreneurs walking up the stairs

offering them a stake in a wide range of business ideas.

But it makes a pleasant change when occasionally they get an offer of an altogether different sort.

-Before we start, would anyone like a drink?

-What wine is it?

-Cabernet Sauvignon.

-I'll have a glass of that.

-Gin and tonic for me.

-I'd normally ask for a shandy!

Drinks in hand, the Dragons then heard 21-year-old barman Dan Thompson from Vauxhall

offer them 45% of his "all-you-can-drink" private members club.

The price to the customers, £15.40 a week.

The main draw is the fact there will an open bar

on house spirits, beers and wines.

Alarm bells rang from the outset when Dan explained

his aim was to target corporate membership.

Why would I want all of my staff to be a member of a club

that kept them out drinking all night?

Do you not think my rate of sickness might go up? Quite a few hangovers in the morning?

-That's how you run your company.

-I think Deborah would be taken to a tribunal.

-Would I?

-When she fired them, they'd say, "It's her fault" and take you to a tribunal!

"She made me do it! She bought me membership!"

But the atmosphere soon got serious

when the full ramifications of Dan's business model became clear.

I can't understand where you're going with this.

With all the discussions about how bad alcohol is for you,

and binge drinking, et cetera,

and you're putting a business concept forward

that may exacerbate that problem.

I've had bars and restaurants and there are people that go to the pub every day.

But you're over-incentivising with a commodity that unfortunately is incredibly addictive.

We can actually add on plenty of other sales to them. Food...

They'd be too drunk to eat food. And that's why I'm out.

-DUNCAN:

-See you soon with your next idea.

Peter Hart from Poole used to run a fruit and veg market stall

before becoming a Bluecoat entertainer.

He's next in the den, along with his wife Michelle.

They both manage to run a company and raise their seven children.

It's a fun business, but will it earn an investor serious profits?

Hi, I'm Michelle. This is my husband and business partner, Peter.

We're here today to ask for a £100,000 investment

for a ten per cent stake in our company, Fun Fancy Dress Ltd.

We've been a limited company for over three years and have so far generated a turnover

of over £900,000

with a net profit of around 142,000.

We currently employ seven people and hold stock worth over £100,000.

Our website receives over 45,000 unique visits per month

with an average order value of £29.

We opened two stores across 2010.

The first store was in Poole, Dorset.

Our second store in Bedworth, Warwickshire.

We need your investment to help increase the market share of our online business,

plus help us roll out a franchise programme.

We aim to open two pilot stores this year, five next year and ten the year after.

We feel that with an investor on board, we can improve this performance

and become the first national branded chain of party stores.

Thank you for listening. We look forward to answering your questions.

A colourful pitch from Peter, Michelle and members of the Hart family.

In return for a 10% stake, they need £100,000

to franchise their fancy dress business

and turn it from a local to a national brand.

Duncan Bannatyne is first to question the couple.

OK, just so I get this in my head.

Do you hire costumes or just sell them or a mixture of both?

-A mix of both.

-And you do some of that on your website

and some in stores as well?

It's only hire costumes in store at the moment.

-Right. On the website you sell?

-Yeah.

-Purely retail.

-What percentage of the money you've turned over, 900,000,

came from the website?

The year ending March this year

the website took just over 150,000.

Now the stores. Give me them individually.

Only one of the stores has completed its first year, the one in Poole, Dorset.

-That turned over just over 113,000.

-OK.

Can a shop turn over 113,000 in a year and make a profit?

Yes, we have. The net was around 18 to 20 per cent.

Encouraging figures and an encouraging start from Peter and Michelle.

But what of the business plan? Theo Paphitis wants to know.

Hello. I'm Theo.

-Theo.

-Hello.

-OK. Tell me what your franchise model is

and why it would be attractive to me as a franchisee.

The brand, which we'd build in time.

-The brand is?

-Fun Fancy Dress Ltd.

Fun Fancy Dress, that nobody knows at the moment. What else?

Access to our suppliers at the prices we purchase at.

-Beneficial purchasing from your suppliers.

-Yes.

-OK.

-How much would you charge me?

-In the region of 20 to 40,000.

-That would include the shop fit.

-How do you make your money from then onwards?

We'd charge a license fee of the turnover of around eight per cent.

OK. So what would my margin be?

We'd expect you to turn over between 100 and 130 in the first year.

So you should be able to net in the region of 20 per cent in the first year.

No, my gross margins.

-How do you mean, sorry?

-It's easy.

My sales less my purchases.

Um...

You'd probably, I think...

50,000? 60,000?

So 40, 45%, is that what you're saying?

If I understand you correctly, yes.

Well, it's very simple.

Through the till, my sales.

Less what it cost me to buy the product that I sold.

You'd be left with about 70%.

-So you make 70%?

-Yep.

-OK.

And you're going to charge eight per cent.

What per cent benefit would I get in my purchasing

compared to what I could buy for myself?

About 15, 20 per cent.

Peter, you've not thought this through.

The fact is, what you're going to charge me when you gross it up is practically no different

to what I'd get if I didn't get your buying power.

Except I'd end up paying over the top for a shop fit.

A complex and somewhat tense exchange as Theo Paphitis questions the deal on offer

to potential franchisees.

And it doesn't look like the couple are about to find any solace from Peter Jones.

-Peter, Michelle.

-Peter.

-Hi.

-Hi.

If I was to invest in this opportunity,

I wouldn't be doing what you're doing at all.

If I look at this model, I've got £113,000-worth of revenue.

And I'm going to generate about 18% net before I take my salary.

So I'm going to make...

..25,000 a year.

Or...

I could go round the corner and get a job without any hassle,

without any worries, without sleepless nights.

So your incentive for somebody else to become entrepreneurial and make it happen for themselves

doesn't make commercial sense.

So it's coming across as though it's a wing and a prayer at the moment.

You haven't really gone into the detail of having a franchise operation.

No, we've never launched a franchise business. We've only been in business ourselves for three years.

-Yes.

-Maybe we're showing our naivety.

We need more experience to go down the franchise route.

But part of us coming here and asking that was that you guys have experience.

How much money did you want from us?

-100,000.

-For how much of the business?

-Ten per cent.

So that makes this business where you don't have the experience or a brand,

it isn't making enough money.

You're valuing that business at one million.

Until that point, you could even have empathy.

I could even think, "Maybe I can help."

But then you ask me to buy into your business for £100,000 which values it at one million.

-We do understand.

-Have a reality check. How does it sound?

Michelle, how does it sound to you?

Um, it sounds feasible.

We started two shops from scratch.

We kitted them out, we stocked them out.

-We didn't borrow any money.

-It's not a franchise. It's a chain of shops. Two shops.

-So far.

-We do have a successful business that we've been running for three years.

-Peter...

-I know we don't fully understand franchises.

-It's not that you don't fully understand.

You don't understand at all. I won't be investing. I'm out.

Thank you.

A scathing assessment from Deborah Meaden

and a crushing blow to the husband and wife team.

An irritated Theo Paphitis has now made up his mind, too.

I'm lost... Lost for words.

-I invest in businesses. I don't give you my money and then run it for you.

-Of course not.

If you were to invest and then say this franchise plan is not the way forward...

You know, you have this experience.

-No, I'm not going to tell you...

-An investment of £100,000...

-Peter!

You're asking me to completely remodel your business plan,

reorganise you, tell you how to make money with my money.

If I was going to do that with 100 grand, I could do it myself.

-So I'm going to tell you right now that I'm out.

-Thank you, Theo.

Peter, Michelle,

what you need to do is go and read up on franchising.

Go and understand what you need to do to be able to franchise a brand, a product,

a retail outlet.

Really, you are here too precipitously.

-We're not stood here with a plan in stone, saying...

-You're not stood there with any plan!

You made the franchise model up downstairs before you came up!

-I'm out.

-Thank you.

Two more Dragons walk away from the deal

and Peter and Michelle have just two multi-millionaires left

to rescue their dreams of investment.

Peter Jones is ready to show his hand.

Peter and Michelle, I'm not going to repeat what everybody said cos I totally agree.

But I congratulate you on having a business that is at least a lifestyle business.

And that is a business of which two individuals can support a family.

-But it's not investable for me, and that's why I'm out.

-Thank you.

OK. That just leaves me, Peter, Michelle.

How do you think it's gone so far?

Can we start again?

I think you got a really hard time there.

Definitely don't drop the franchise idea. It's the way to expand. You have a franchise model.

-It's the only way I can see us growing it at the rate we want.

-Yeah.

There was a lady came here called Denise Gosney who had a franchise business Razzmatazz Stage Schools.

All our Dragons had a go at her and declared themselves out.

I invested in her and it is international, worldwide.

That franchise model is doing absolutely fantastic.

So with that in mind, I'm going to make you an offer. OK?

I'll offer the full amount you've asked for, £100,000.

But one thing they're all right about is you have valued the company too high.

And I can't offer you less.

So to offer you £100,000, I need to have 60% of the company.

We can't go to 60%.

I think we'd really like to keep the stake below 50%.

Um...

to be honest.

I think he was thinking more 40.

-Was he?

-She knows exactly... What can you do?

Would it be possible for us to meet at 45?

No. My best offer is £100,000 for 50%.

-Yeah?

-OK, we'd like to accept that offer.

Against all the odds, Peter and Michelle have done it.

I think we'll do well.

They won the confidence and the money of an experienced Dragon investor.

It's a lot more than we wanted to give away, definitely.

But like he says, he's got a lot of experience in that sector.

We've got Duncan as a business partner now. This morning, we didn't.

So good times ahead and hopefully very profitable times.

The Dragons have seen hundreds of pitches in the den

so entrepreneurs have to make theirs stand out from the crowd.

Leon Leigh from Kent certainly adopted a high impact approach

when he asked for £100,000 to develop his range of weight-loss clothing.

My product is...

the ICV technology.

With resistance bands in place over major muscles,

the wearer burns up to 10% more calories every 15 minutes.

This is scientifically proven at Preston University.

-Can we have a look at it?

-Yeah.

Very good. I'm impressed!

Yeah, I can see your pecs and abs. Lovely!

-Feels quite tight. What are these ribs doing to me?

-They're resistance bands.

When caused in motion or movement, any activity causes resistance to the wearer.

Health club owner Duncan Bannatyne was the first to dent Leon's hopes of investment.

-How much time do you spend in the gym?

-Three to four times a week.

-For an hour or two?

-Yeah.

Eight hours a week in the gym. That's how you get your figure, not by using one of these.

In the end, no matter how high the impact or how innovative the clothing range,

it was an old Dragon sticking point that did for Leon.

I've got a guy that looked sensible wearing a shirt and trousers

and the rips his shirt off and tells me he's got something worth a million pounds.

It's predicted figures, so it's all potential.

-OK, I'll just tell you where I am.

-Yeah.

-I'm out!

-Thanks very much.

So far tonight, the Dragons have backed just one business.

We'd like to accept that.

If you'd like to find out why Duncan decided to invest in Peter and Michelle,

press the red button at the end of the programme.

Many entrepreneurs spend months thinking about how they'll make an impact in the den.

Fortunately for Serbian-born Alexander Tomich,

his product creates an immediate spectacle.

But as we know, that's not all it takes to secure the Dragons' cash.

Hi. My name is Alexander Tomich from Serbia.

I'm here to ask you for £80,000

in return for 25% equity.

Company name, Philharmonic Lights.

Purpose, developing the functioning and installation of Philharmonic Lights technology

in the entertainment industry.

Our focus is cruise liners, unknown numbers of luxurious hotels

and amusement parks.

BREATHES HEAVILY

STRUGGLES FOR COHERENT ENGLISH

..with artistically choreographed music...

with dancers.

That's completely wrong.

I don't know. Every time I'm doing the pitch myself, it's fantastic.

But here it's...

I'm wishing that I can start again.

Carry on.

So I would like to show you a mini demonstration of the Philharmonic Lights in action.

MUSIC PLAYS IN SYNC WITH LIGHTS

Wow!

A stuttering start, but former electronics engineer Alexander Tomich

certainly makes up for it with a dramatic demo.

Can I have one of those?

But will that be enough to get an £80,000 investment

in his prototype portable wireless lights.

Theo Paphitis is first to question the entrepreneur.

Alexander, how many lights can you control?

-Unlimited.

-With one piece of kit or...

-With exactly this piece of kit.

Millions of lights you can control.

-Maximum distance?

-Ten miles. Range.

Ten miles guaranteed, but it should be 18 miles.

-In a built-up area?

-No, it must be line of sight.

-Line of sight.

-What if it's not line of sight?

-Then no point because you'd not see the lights.

Alexander, I feel like I'm missing something here.

I'd like you to explain what's unique, what's special about this?

My patent choreographs inside the lights.

Other competition uses different methods.

They send from central computer by radio command to all the lights.

OK. So I now understand what it is that you're doing.

But listen, ten years ago, all my holiday parks had systems

where the music and lights were synchronised.

-Yes.

-So you're trying to take me out of that and into this.

So how much would those systems cost versus this system?

Uh...

That... That... That will cost...

Uh...

I think that, uh...

Definitely more expensive. £150,

for example, to build my lights.

And the competition to have the same range £1,150.

But what is the situation using fixed installation

then really, you should continue to use the competition.

Because this is lower cost.

Alexander's mobile lights may be cheaper,

but the admission that venues would be better off using a fixed lighting rig doesn't go down well.

Duncan Bannatyne is not looking impressed.

I'm sorry, but the ability to synchronise music with lights

and music with fireworks and music with fountains

has been developed for years.

So there's nothing new here at all.

All I think you're doing here really

is showing that you can do it.

-You're right, yes.

-Thank you. I usually am.

-Yeah. But it's not right...

-Alexander, it's really important what Duncan's saying.

He's putting words in your mouth and telling you your product is not new

and your pitch is telling us that it is.

-So either tell him he's wrong...

-I will explain.

-..or agree with him.

-If you agree with him, I'll say those final words.

-I will explain.

-Do you agree with him?

-No.

-Right.

-It is new, because there's no way the competition will do 100 lights

with the same reliability as my lights can do.

Alexander, I'll tell you where I am.

You might be a fantastic engineer, fantastic electrician

or whatever it is you are,

but you've invented or come up with nothing new here.

-I'm not going to invest and I'm out.

-Thank you.

A first blow for Alexander and a damning critique of his product.

But Theo Paphitis wants to know more about the man behind the invention.

Alexander, how did you end up in the UK?

Well, I came here for honeymoon with my wife and...

-You didn't go back.

-I didn't go back because the war started in Serbia.

The war started.

So what is happened. 1999. We were waiting that everything is finished

so we can return.

And our first child was born

-and then it started to be more difficult.

-How did you survive and keep body and soul together?

Well, it's, uh...

I have quite a few skills.

So I find a job and that's it.

What I also... The reason why I stay here

is because I find... It's very difficult to explain to English people,

but it's... You feel like in home.

A heartfelt exchange perhaps,

but it takes more than that to impress these Dragons.

Can Hilary Devey find a reason to invest?

-Can we go back to the business, the commercial...

-Yes.

Some numbers.

Actually turning your lights into a business.

What my plan is, the first year to sell five units. Just five.

The second year to sell 20.

And the following third year 40 of these units.

I'm struggling to find your market.

I can't find you a market that would be sustainable

and that would be regular.

I just don't think you've got this quite right.

I'm out.

OK, Alexander, listen.

There's been some great inventions in this world

which have made no money.

There's no point in spending years and years of your life developing something

that nobody will buy.

Yeah.

-I love your lights.

-Thank you.

-But I'm going to say those words.

-Yes.

-Well done, but I'm out.

-Thank you.

Alexander, unfortunately there is something available that is cheaper.

I think you'll sell a few of these but I'm not convinced

that you're going to have a massive market and the type of market that you think.

-So for that reason, I'm out.

-Yeah, OK. Thank you.

Three more Dragons out, and Alexander's time in the Den looks to be coming to a close.

Will Peter Jones offer him the financial lifeline he desperately needs?

Alexander,

I don't buy into the scale of the lights that you're talking about

in terms of...demand.

But I do buy into what you've created here.

It clearly works beautifully.

I would urge you to talk to companies that are out there that are already doing these things.

This could be a very good small business for you.

For that I wish you the best of luck.

-But as an investment to make money...

-I understand.

-I can't get there.

-Thank you.

-That's the reason I'm out. Thank you, Alex.

-Thank you.

A disappointing end. Alexander leaves with the Dragons' goodwill,

but it was their money he really needed.

It's not the end of the story.

I not expect millions to make.

But at least a nice life for my family.

For my kids, of course.

You know at least with some things I can go out!

Other entrepreneurs who tried and failed in the den

included former Army officer Justin Potter

who needed £50,000 to continue protecting the nation

from a lesser but still hazardous issue.

I'd like you to imagine you're at home, filling a hot water bottle.

You're in danger of pouring boiling water over your hand.

Very simply you can put the bottle into the neck, take your hands away

and you can fill it up.

At first, the Dragons were intrigued not by the invention

but by the inventor himself.

How long were you in the military?

23 years. I was in the Royal Artillery. I retired at 42 as a lieutenant colonel.

-What have you done since you left?

-I set up a training company

which over five years I grew from two of us to 85 staff,

turning over just under seven million pounds.

But having impressed the Dragons with his past,

they couldn't see a financial future in his present venture.

-I don't think you're going to sell many.

-OK.

-But you could completely change my mind

-if you've got some evidence.

-I've looked at the size of the market and where hot water bottles are used.

-The question I can't answer is how many people will buy this.

-Absolutely.

Which I would have thought you'd understand in any business the only question to answer is

how many people will buy one. I'm afraid, Justin, I'm out.

Right.

Mother and daughter Rachel and Carmen John

transformed the den with their impressive range of knitwear.

They needed £100,000.

With our big knitting, we recently did a window for Stella McCartney.

These are the first in the world examples

using 95 strands of yarn. Never seen before in history.

We intend to build up the manufacture of our tools

because people are now looking at this as a new basic in knitting.

The textile display brought back some happy memories for one Dragon.

My old grandmother, Elatha, her name was, was a great crocheter and knitter.

She would have huge knitting needles. So will all due respect,

it's been going on a very long time.

That's true.

But not at this level.

This is a new level of craft.

It seems more that it's a hobby rather than a business concept.

I'm a tool maker, I'm an inventor.

That's not a hobby to me. That's a lifestyle.

Unfortunately for Rachel and Carmen, it was a lifestyle that none of the Dragons could imagine transforming

into a big enough business.

One thing that retailers do well. If somebody wants this in large volume, they'll create their own.

-I can't invest in that and I'm out.

-Thank you.

There's nothing that investors like more than innovative products

combined with entrepreneurs who have a proven track record in business.

Next into the den are two brothers, Jim and Richard George from Worcestershire,

who think they score on both counts.

Will the Dragons agree?

-I'm Jim George.

-I'm Richard George.

-We're from Post Saver.

We're looking for £160,000 for a 20% stake in our business.

This timber fence post has failed after only three years in service.

As a solution to this problem,

we've developed, patented and manufactured a unique

dual layer sleeve system

that protects the vulnerable part of the post.

To apply, simply heat-shrink the sleeve onto the post.

The result of this is a double life fence post.

Double life fence posts will save consumers

at least 40% of the life cycle cost of their fencing.

We launched Post Saver onto the UK market two years ago.

Following more and more premature fencing failures,

our sales are growing month on month.

We believe Post Saver represents an excellent investment opportunity for the Dragons.

Thank you.

An assured pitch from brothers Jim and Richard George.

To increase production of their fence post preservation sleeve,

they need a £160,000 cash injection

in return for 20% of their company.

Theo Paphitis is first to question the Worcestershire siblings.

-Richard, Jim. "Premature fencing failure."

-Yes!

It's never kept me up at night!

No! But if you've just bought a nice new fence,

and paid x thousand pounds for it and after three years the fence posts rotted,

you wouldn't be very happy!

Just explain how it works. I understand if you cover something, it protects it.

-Yes.

-But the pointed bit is still in the ground.

Just to give you some background. Ground level was about here on this product.

Below this band, the timber's totally intact.

So it's two or three inches below ground level where you get the high rates of decay.

It does seem, if I'm doing a small amount of fencing, DIY,

-I'm not going to have the equipment to use this.

-We do have a growing number of stockists and contractors

and two large saw mills starting to take the product

and roll it out.

So you could buy the post with the sleeve already on it.

-Is that the market?

-That is the primary market, yes.

The market size on the UK market

is somewhere between 40 and 80 million posts go into the ground every year.

We've got global IP protection

in France, Germany, US, Canada, Australia and Japan.

Thank you.

Confident claims, and the Dragons are clearly impressed.

Now Hilary Devey wants to drill down into the finances.

Talk me through the numbers and your projections.

Our target for this year is about 240,000.

Next year we're looking at 510,000.

Where are you going to double that growth from?

Natural organic growth which we're seeing more of. We're learning how best to tackle the market.

-It's...

-When you say you're learning all the time, you've run businesses before.

We've had two businesses. We were manufacturing door products which we sold.

About ten years ago. There have been other products that we've developed.

We licensed that to a large German company and sold the IP to them about two years ago.

We made about 400,000, which we've ploughed into the development of Post Saver.

Jim, Richard, hi, I'm Deborah.

So you talked about turnover, which is great, but I'm much more interested in profit!

The first year we're looking at a net profit of just over 30,000.

Next year, 160.

Then year three, just over 380,000 on that.

OK, so in this year, what's your pipeline looking like?

We received an order from a saw mill this week, for six or £7,000.

We're getting regular orders from farmers, fencing contractors, online orders.

We're currently in discussions with Network Rail

who are responsible for all line-side fencing.

I'm going to make you an offer.

I'm going to offer you all the money.

And I want 35% of the business.

Jim?

It's a very kind offer, but I don't think we could.

We've put so much into it and got so much confidence in it.

An early offer, but an early rebuttal, too, from the confident duo.

Will Duncan Bannatyne choose to enter the fray?

Richard, Jim.

Where are you in your percentage? What's negotiable?

Up to 25% I would guess.

We've got a lot of confidence in the product and the market.

I've got a lot of confidence in you guys and confidence in the product.

I'm not convinced, though,

that there's enough profit because you have to sell so many of them

-in order to get such a big return.

-Yes.

I'd find it difficult

to offer you more than your £160,000 for 30 per cent.

But I'm happy to offer you half the money and split it with another Dragon if anyone wants to split it.

OK.

Unable to match the brothers' percentage demands,

Duncan Bannatyne gives them two further investment options.

Will Theo Paphitis choose to undercut his rivals?

What are you looking for out of this?

Essentially, we're looking to establish the product,

build up the business with good value in it. At that point, there are lots of options.

Give me an idea of a timeline.

Five years is the period we're looking at.

OK.

I will offer you all the money.

I would also be wanting 30%.

OK.

-HILARY:

-Can I ask you one question?

Would you be happier with two Dragons?

Possibly, yes.

Yes.

If Duncan's happy, I'm happy to split the equity and split the investment.

OK.

80,000 each and 30% between us.

So you get us both.

OK.

Jim and George now have four offers on the table

but all for more equity than they want to give away.

Can Peter Jones find a way of matching their valuation?

Jim, Richard, I think you're model presenters.

You're experienced, you've been there and done it.

You are an investor's dream as individuals.

But £160,000 for a 25% circa investment,

I think the business will struggle to make the level of return

in terms of the opportunity with this. For those reasons, I won't invest and I'm out.

OK, I'm going to give you a second option on this.

I am prepared to look at the percentages.

But I personally think I would add an awful lot of value.

And I am just going to struggle to get below 30%.

But what I would do

is say to you

that if you hit the targets you've given us

I would hand you back five per cent of the shares.

So you get to your 25 per cent.

Can we talk about that briefly?

Thank you.

THEY WHISPER

25 is 25, isn't it?

I don't know. I'll leave it to you.

Think carefully.

We've decided to stick to our guns on the 25%.

What you've just done is illogical.

You have given me a set of targets that you are going to meet

-so you've got your 25%.

-Yes.

The tension mounts as the sure-footed entrepreneurs again refuse an offer

from Deborah Meaden.

Will the remaining Dragons now be prepared to negotiate down

to meet the brothers' steadfast equity demands?

I agree with what Deborah's just said.

OK.

Just that one act

I think your actions was one step too far.

That could either make you a million-pound deal,

or lose it you.

I've just lost confidence in you, really.

I'm out, now.

-Do you want to ask me if I want to improve my offer?

-Uh-huh.

Ask me, then!

Do you want to improve your offer?

Having considered,

I've decided not to.

I'm out.

I'm going to give you one last chance.

I'm actually prepared to share the last offer that Deborah made you.

And you get two Dragons.

Hilary was absolutely right. There's a moment sometimes in a deal where you think,

"It's... I don't want it now."

You made a very poor decision there.

I'm sorry. My offer doesn't stand.

I'm out.

You had four Dragons who were prepared to support you.

But we all live and die by decisions we take in life.

Gentlemen, I'm out.

Jim and George leave having failed to negotiate a deal.

It's not often that entrepreneurs turn down six different offers from the Dragons!

Well, guys, had you come in with 25% as your limit?

Essentially, we had, yes.

We've put so much into the business so we were fairly firm about that from the outset.

You could have had 25% if you hit your projections.

They thought you can't believe your own projections if you turned down the offer.

To have accepted Deborah's offer it would have been additional pressure on us.

-But you do believe your projections?

-We do, but it's racheting up the pressure.

Whether we'll live to regret it, possibly.

It's certainly been a remarkable end to the day.

Not many entrepreneurs have the confidence to say no to one Dragon, let alone four!

But that's what Jim and Richard George have done.

Showing that in the den, as in life,

if you don't like a deal, you can always walk away.

If you'd like to know more about why the brothers turned down the Dragons

press the red button now

where you'll also find behind-the-scenes interviews with our millionaires. Goodbye!

Next time on Dragons' Den:

Let's get some Mexican flavours going.

Your mum is very happy with her pancake shop. You have got ants in your pants!

I feel like you've got a shield up and you're deflecting

the only answer that I'm trying to get to.

-Three million you value this product at?

-More than that.

I know the other Dragons will think I've lost my marbles

but I'd like to make you an offer.

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