0:00:25 > 0:00:27'These are the Dragons.
0:00:27 > 0:00:31'Five of Britain's wealthiest and most enterprising business leaders.
0:00:31 > 0:00:38'Over the coming weeks, they'll make or break the dreams of dozens of budding entrepreneurs.'
0:00:40 > 0:00:45- Oh, what? That's weird. It's so ticklish! - You've got fish on your feet!
0:00:45 > 0:00:49I'm going to make you an offer, but I want a higher percentage.
0:00:49 > 0:00:55You stand in front of a group of people who could change your life overnight...
0:00:55 > 0:00:59How do you hope to grow your business if you can't even motivate yourself
0:00:59 > 0:01:03to do what should've been the biggest pitch of your life?
0:01:03 > 0:01:06Have you ever heard of the saying, "A mountain to climb"?
0:01:06 > 0:01:08You've got several.
0:01:12 > 0:01:18'The multi-millionaire investors have each built up their fortunes from scratch.
0:01:19 > 0:01:23'Hotel and health-club owner Duncan Bannatyne.
0:01:23 > 0:01:27'Leisure industry expert Deborah Meaden.
0:01:27 > 0:01:30'Retail magnate Theo Paphitis.
0:01:30 > 0:01:33'Telecoms giant Peter Jones.
0:01:34 > 0:01:40'And Hilary Devey, who made her millions in the haulage industry.
0:01:40 > 0:01:45'The Dragons have the credentials, the contacts, the commitment and the cash ready to invest.
0:01:45 > 0:01:48'But only in the right business.
0:01:48 > 0:01:52'Will any of these hopeful entrepreneurs walk away with their money?'
0:02:00 > 0:02:02Welcome to the Dragons' Den.
0:02:02 > 0:02:05Our five multi-millionaires are ready and waiting
0:02:05 > 0:02:10to put that all-important investment into business ideas and inventions
0:02:10 > 0:02:13that come before them. But it's their own money at stake,
0:02:13 > 0:02:18so only the best entrepreneurs can expect to walk away with any cash.
0:02:18 > 0:02:23Hong-Kong born Karen Ho and husband To Chan are first into the den.
0:02:23 > 0:02:27The beauty industry is notoriously hard to succeed in,
0:02:27 > 0:02:30but can their new concept overcome the challenges?
0:02:51 > 0:02:54- Good afternoon, ladies and gentlemen. I'm To.- And I'm Karen.
0:02:54 > 0:02:57And we're representing Aqua Sheko Fish Spa.
0:02:57 > 0:03:00We're looking for 150K investment
0:03:00 > 0:03:03in return for 30 percent of equity.
0:03:03 > 0:03:08In June 2010, we opened our first venue.
0:03:08 > 0:03:12It was one of the first fish spas in London
0:03:12 > 0:03:14and we soon attracted a lot of customers.
0:03:15 > 0:03:19December 2010, we opened our Soho venue.
0:03:19 > 0:03:23And this is an illustration of the facilities.
0:03:23 > 0:03:26A garden feature fish pedicure hall.
0:03:26 > 0:03:31Also a modern Japanese bar with fish manicure areas.
0:03:31 > 0:03:35Our first year turnover is a bit over £400,000
0:03:35 > 0:03:41and the £150,000 investment will be used to open two more shops.
0:03:41 > 0:03:46The further expansion would establish our brand
0:03:46 > 0:03:50as well as broaden the customer base that we have.
0:03:50 > 0:03:54- Erm, please feel free to try it. - PETER: I'll try it.
0:03:57 > 0:04:03'An orderly pitch from husband and wife team To Chan and Karen Ho.
0:04:03 > 0:04:06'To expand their new beauty treatment brand,
0:04:06 > 0:04:09'the couple are prepared to give away 30 percent equity
0:04:09 > 0:04:13'but need a £150,000 cash injection in return.'
0:04:14 > 0:04:19'Peter Jones is keen to put their claims to the test.'
0:04:19 > 0:04:22- You put one foot in?- Yes.
0:04:23 > 0:04:25Oh, what? They're all grabbing for me.
0:04:26 > 0:04:31- That's weird. And so ticklish! - You've got fish on your feet.
0:04:31 > 0:04:33- After two minutes, you enjoy it. - Two minutes?
0:04:33 > 0:04:37You must do better than our lady customers who are fine after five seconds.
0:04:37 > 0:04:43- HILARY: What does it feel like? - Like they're sucking on me. It feels weird and it's making me sweat.
0:04:43 > 0:04:47- Very quickly.- What fish are they? - They're called garra rufa.
0:04:47 > 0:04:52- What are they doing? They're eating part of my skin? - Yes, your skin is protein to them.
0:04:52 > 0:04:55They're gently sucking away on your feet.
0:04:55 > 0:04:59I usually describe to customers as a thousand kisses.
0:04:59 > 0:05:05- Have you not fed these fish for ages?- No, no.- They were fed yesterday by a few customers.
0:05:05 > 0:05:08How long does it take for them to clean his feet?
0:05:08 > 0:05:13For the optimal effect, it's around 25 minutes per session.
0:05:13 > 0:05:17I will say that I do feel very different than when I first went in.
0:05:17 > 0:05:20It is quite strangely, weirdly cleansing.
0:05:28 > 0:05:32'One successful demonstration and one Dragon convert.'
0:05:32 > 0:05:36- Feel your feet. Are they softer? - I can feel that they're amazingly soft.
0:05:36 > 0:05:42'But now spa and health club owner Duncan Bannatyne wants to focus on the business itself.'
0:05:45 > 0:05:47- Karen and To.- Yes.
0:05:47 > 0:05:51So, in year one, your turnover was £400,000.
0:05:51 > 0:05:54- Yep. - Right. What was your gross profit?
0:05:54 > 0:05:56About 100...
0:05:59 > 0:06:01180-something.
0:06:01 > 0:06:06- What was your net profit? - Er, about 112.
0:06:06 > 0:06:13That sounds a really big profit margin in this industry.
0:06:14 > 0:06:17Is that growing on a month-by-month basis?
0:06:17 > 0:06:20Or do you have blips when it goes up and when it comes down?
0:06:20 > 0:06:24There would be, of course, blips, but what is important is that
0:06:24 > 0:06:29we are seeing people saying, "It's great, we'll come back," or "We'll recommend to friends"
0:06:29 > 0:06:34- and that people start using our loyalty cards.- So are you the only people doing this in the UK?
0:06:34 > 0:06:39- We are not the only people in the UK, no.- Other people are doing it?- Yes.
0:06:39 > 0:06:43- How many competitors have you got? - It's not that important to count the competitors.
0:06:43 > 0:06:48It's more important to decide in this new market how we're going to play in three years.
0:06:52 > 0:06:56'Assured and reasoned responses from the confident entrepreneurs.
0:06:56 > 0:07:00'Theo Paphitis looks intrigued.'
0:07:00 > 0:07:04So this is something you just decided to do?
0:07:04 > 0:07:10Yes. We went to Macau and there was a hotel in Macau and they had a fish bar there.
0:07:10 > 0:07:13We tried it. It was amazing.
0:07:13 > 0:07:17We came back and we quit our jobs and we started this.
0:07:17 > 0:07:20And we think business is fun. We really like business.
0:07:20 > 0:07:22What's your background?
0:07:22 > 0:07:27- We studied at the University of Oxford, both in science degrees. - What degree did you get?
0:07:27 > 0:07:33- First class honour, Gibbs prize. - Karen?- Merton College Oxford and I did physics.
0:07:33 > 0:07:39- And what did you do after that? - I went to Lehman Brothers to become a quantitative trader.
0:07:39 > 0:07:42- You went to Lehman Brothers?- Yes.
0:07:43 > 0:07:48Consultant for one of those consulting firms in London.
0:07:48 > 0:07:50Magnificent.
0:07:53 > 0:07:56'The impressive duo may be garnering praise from the Dragons,
0:07:56 > 0:08:01'but it's their £150,000 To and Karen really need.
0:08:01 > 0:08:05'Will Hilary Devey find a reason to invest?'
0:08:07 > 0:08:11Is your vision to continuing opening shops
0:08:11 > 0:08:16or is your vision to sell this product to existing spas?
0:08:16 > 0:08:20I mean, I go in nail bars,
0:08:20 > 0:08:23and the turnover is phenomenal in such a small place.
0:08:23 > 0:08:26I've actually sat there and calculated their profit
0:08:26 > 0:08:29whilst I've been having my nails done.
0:08:29 > 0:08:35Now, I could imagine that product going into a salon-type operation like that
0:08:35 > 0:08:40and that would make that salon more profitable. So is that element part of your business plan?
0:08:40 > 0:08:43We cultivate our brand very carefully.
0:08:43 > 0:08:47We will not open too many, we will not spread it everywhere,
0:08:47 > 0:08:50in one capital, we will only have a few.
0:08:50 > 0:08:53But we are prepared to expand overseas if need be.
0:08:53 > 0:08:56Explain your logic there.
0:08:56 > 0:09:00It is most important for us to make sure our brand is good.
0:09:00 > 0:09:03If an independent spa decides to cut on the cost,
0:09:03 > 0:09:07then we have further to control, and once damage is done, it's done.
0:09:07 > 0:09:12I'm sorry, but I do disagree, cos I'm all about growth and profit.
0:09:12 > 0:09:18Yes, I'm very brand conscious, but I think there's ways you can do it without brand denigration.
0:09:18 > 0:09:23So I think your whole business strategy, for growth, for profitability, cos let's face it,
0:09:23 > 0:09:26that's what we're all in business for, to make money,
0:09:26 > 0:09:30and I think you've missed a trick somewhere. And because of that, I think we conflict.
0:09:30 > 0:09:33So I'm out.
0:09:35 > 0:09:41'A first blow, as strategic differences cause the couple to lose one Dragon.
0:09:41 > 0:09:46'And Deborah Meaden looks to have something on her mind, too.'
0:09:48 > 0:09:52Can you breed these fish? Have you thought about breeding these fish?
0:09:52 > 0:09:56Yes, we have thought about it, but at present, we have not put that into plan.
0:09:56 > 0:10:00- So you buy live fish and they're all live.- Yeah.
0:10:01 > 0:10:05Do you know, tanks and cages make me feel sad.
0:10:05 > 0:10:09I think you guys are very good and you've come up with a very good business model,
0:10:09 > 0:10:12but I don't like export trade in live animals at all.
0:10:12 > 0:10:16- Yeah.- It's not a type of business that I would operate in.
0:10:16 > 0:10:19- I'm out.- OK.- It's fine. - Karen and To.
0:10:19 > 0:10:24I don't doubt for one minute that you're two great young entrepreneurs.
0:10:24 > 0:10:29And what you've done I think is absolutely wonderful. Magnificent. So I think you should continue.
0:10:29 > 0:10:35But you don't have something that can't be copied. Everybody can copy it.
0:10:35 > 0:10:37So I'm not going to invest.
0:10:38 > 0:10:40I'm out.
0:10:43 > 0:10:49'Two more Dragons out and the investment tides looks to be turning against To and Karen.
0:10:49 > 0:10:52'But can high street expert Theo Paphitis
0:10:52 > 0:10:55'see a money-making future in this business?'
0:10:58 > 0:11:01I've got to be honest, I find it very difficult to make a decision.
0:11:01 > 0:11:06Because you two are good. You qualify. You get a tick in the box.
0:11:10 > 0:11:14I worry about the barrier to entry. It's not a lot.
0:11:14 > 0:11:19I then worry about how you move the brand across.
0:11:19 > 0:11:22Cos I'm pretty certain, within a short period of time,
0:11:22 > 0:11:24this market will be congested.
0:11:24 > 0:11:30And I'll then be relying on how you separate your business from the crowd.
0:11:33 > 0:11:36When I take all those things into account...
0:11:37 > 0:11:40..I don't quite get to a yes.
0:11:40 > 0:11:42- Mm.- OK.- OK.- That's fine.
0:11:42 > 0:11:44- I'm out. - Right. Thank you.- Thank you.
0:11:45 > 0:11:49To, Karen, erm...
0:11:53 > 0:11:59You've without question proved your level of aptitude when it comes to looking at a business
0:11:59 > 0:12:05and trying to make a business work and I enjoyed it and I'm sitting here thinking, "This is great".
0:12:06 > 0:12:12One last question that I've got, though, you're in here wearing dirty trainers.
0:12:12 > 0:12:16Is there a reason for dressing in oil-based jeans?
0:12:16 > 0:12:21I can explain why. We painted the floor ourselves.
0:12:21 > 0:12:23We did the sawing ourselves.
0:12:23 > 0:12:26We are very hands-on people.
0:12:26 > 0:12:28And if need be, we will get ourselves dirty.
0:12:28 > 0:12:32- That's a really good answer, by the way.- Mm.
0:12:32 > 0:12:38In terms of the business opportunity, I am literally, on a balance, that close.
0:12:39 > 0:12:46The 112K that you made, how much of that would you normally have taken as salaries?
0:12:47 > 0:12:49We take minimum wage.
0:12:49 > 0:12:54But how much, realistically, would you like to see yourself taking in the next 12 months?
0:12:54 > 0:13:01We are going to put most of our money back into investment, to realise our strategy of opening more shops,
0:13:01 > 0:13:05so our current position of taking minimum wage only will hold.
0:13:08 > 0:13:09Erm...
0:13:09 > 0:13:12Does your business have any debt in it?
0:13:14 > 0:13:1663,000.
0:13:16 > 0:13:21- 63?- Mm. That's the loan to support the opening of the Soho venue.
0:13:28 > 0:13:33To, Karen, I think it's just tipping the balance the other way, unfortunately.
0:13:33 > 0:13:38I don't see how I can make money
0:13:38 > 0:13:40at 30 percent of your business.
0:13:40 > 0:13:45I'm going to say to you, I'm not going to invest and I'm out.
0:13:48 > 0:13:52'The Dragons may have been tempted by the proposal,
0:13:52 > 0:13:56'but none could find a reason to invest their £150,000.
0:13:56 > 0:13:59'To and Karen leave with nothing.
0:14:04 > 0:14:07'This year, the den has played host to a number of products
0:14:07 > 0:14:10'aimed at the health and fitness market.
0:14:10 > 0:14:13'But so far, we've yet to see the Dragons invest in one.
0:14:13 > 0:14:17'Business partners Scott Robert Shaw and Lee Collinson James
0:14:17 > 0:14:22'wanted £100,000 to get us all skipping to a different beat.'
0:14:22 > 0:14:25We believe that skipping is for everybody.
0:14:25 > 0:14:31We wanted to bring a fusion of sport skipping and street dance, which is Skip-Hop.
0:14:32 > 0:14:35DANCE MUSIC
0:14:48 > 0:14:52'It may not have been a scientific assessment,
0:14:52 > 0:14:56'but the den demo achieved only a 50 percent success rate.'
0:14:56 > 0:15:00- Shall we skip together, Peter? - Duncan can skip. I've never tried it.
0:15:00 > 0:15:03- Hang on, Duncan, hang on! - SHE LAUGHS
0:15:03 > 0:15:08Give me half an hour, I could have you skipping. THEY LAUGH
0:15:08 > 0:15:12'Having tried the skipping, the Dragons got down to numbers.
0:15:12 > 0:15:14'Was the duo's success rate any better there?'
0:15:14 > 0:15:17Have you ever heard of the saying, "Mountain to climb"?
0:15:17 > 0:15:21- Certainly have.- You've got several before you can convince me
0:15:21 > 0:15:25- to invest £100,000 on a skipping rope.- OK.
0:15:25 > 0:15:30You've got a business that you're valuing at half a million pounds. How?
0:15:31 > 0:15:35- The...- Come on, snap, snap! You should have the answer!
0:15:35 > 0:15:38You're coming here asking us for 100 grand.
0:15:38 > 0:15:42We've done a lot of study and we believe the turnover is more than achievable.
0:15:42 > 0:15:45Do you know what? I don't believe it.
0:15:45 > 0:15:52'In the end, it was 100 percent of the Dragons who chose not to invest.
0:15:52 > 0:15:54'And that signalled the end for Scott and Lee.'
0:15:54 > 0:15:58- Tell me your background. - I was a self-employed skipping coach.
0:15:58 > 0:16:04I was making a very good living until I decided that we ought to start my own business and do it my way.
0:16:04 > 0:16:09So you earned really good money, things were great, and then you started this businesses? Yes.
0:16:09 > 0:16:13What do you think the conclusion would be if I said that to you?
0:16:13 > 0:16:15Yes, I can see where you're leading.
0:16:15 > 0:16:21- Don't suggest where I'm leading, what would your advice be? - Don't do it.- And that's why I'm out.
0:16:24 > 0:16:29The Dragons know nothing about the products or the entrepreneurs they see
0:16:29 > 0:16:31until they walk up the stairs into the den.
0:16:31 > 0:16:35So don't be surprised if the multi-millionaires ask searching questions
0:16:35 > 0:16:38before deciding whether to invest.
0:16:38 > 0:16:43Is successful entrepreneur Alan Pearson from Middlesbrough ready for the challenge?
0:16:59 > 0:17:04Hello, my name's Alan Pearson. I'm a sign manufacturer from Teesside
0:17:04 > 0:17:09and I have two products here that I'm going to pitch to you.
0:17:10 > 0:17:13The first, which is street nameplates,
0:17:13 > 0:17:17and the second is a new product called Strim Base.
0:17:18 > 0:17:24The street nameplates, it's a recycled plastic product,
0:17:24 > 0:17:26and a recyclable plastic product.
0:17:26 > 0:17:29It, erm... It, er...
0:17:31 > 0:17:35We've been selling around £100,000 worth of them a year.
0:17:35 > 0:17:37Erm...
0:17:37 > 0:17:43The other product I have is something that I developed off the back of this product.
0:17:43 > 0:17:45One of my councils I was selling to
0:17:45 > 0:17:49was putting a concrete base round the bottom of the street nameplate.
0:17:49 > 0:17:54It's cheaper to do that in the long term than actually strim round them.
0:17:54 > 0:17:56So I came up with a product that can be mowed over,
0:17:56 > 0:18:01will stop the grass growing round the post, and, er...
0:18:05 > 0:18:11- Is that it?- Sorry. I'm looking for £100,000,
0:18:11 > 0:18:15to give a ten percent equity in the company for £100,000.
0:18:17 > 0:18:19Erm... Thank you very much.
0:18:23 > 0:18:28'An understated pitch from nervy Teessider Alan Pearson.
0:18:28 > 0:18:33'He's looking for a cash investment in his new business specialising in street signs
0:18:33 > 0:18:39'and a maintenance-friendly accessory. Deborah Meaden is in need of some clarity.'
0:18:40 > 0:18:44Erm, what I'd like to understand
0:18:44 > 0:18:46is what your business looks like at the moment.
0:18:46 > 0:18:51- Because I think you said you sold £100,000 worth of this product. - Mm-hm.
0:18:51 > 0:18:56But that kind of implies there's another business that's sitting behind all of this.
0:18:56 > 0:19:01Yeah, this would form a new business. I have an existing business, Ensign, which...
0:19:01 > 0:19:05Sorry. So the business that you've currently got, is it profitable?
0:19:05 > 0:19:11- Yes.- How much profit?- The turnover this year was about £800,000
0:19:11 > 0:19:13and we made a good profit.
0:19:13 > 0:19:16- A good profit?- Mm. - What's a good profit?
0:19:16 > 0:19:18Well, yeah, er...
0:19:22 > 0:19:26That... I'd rather not... That's...
0:19:26 > 0:19:29We're looking at... This year, we made about £60,000.
0:19:29 > 0:19:34So £800,000, net profit £60,000. Park that business to one side
0:19:34 > 0:19:40and this product here that you've sold £100,000 of, how much profit did that make?
0:19:40 > 0:19:43- We'd be looking at about £60,000 gross.- Right.
0:19:43 > 0:19:45- So presumably you've got accounts. - Yes.
0:19:45 > 0:19:50- So what do those accounts... - Well, this is part of the Ensign business at the moment.
0:19:50 > 0:19:53This has been... This is part of Ensign.
0:19:53 > 0:19:59So you've got a product, a new product, sitting inside your existing sign business.
0:19:59 > 0:20:04I'm really interested to understand why you've decided to take them out of your existing business.
0:20:04 > 0:20:08Because I think that these products would be of interest to you.
0:20:08 > 0:20:12The sign business, standing on its own, doesn't need the investment...
0:20:12 > 0:20:15Investing in a business that has a proven track record
0:20:15 > 0:20:18and is making a profit is always of interest to a Dragon.
0:20:20 > 0:20:24'An awkward first exchange from the tongue-tied entrepreneur.
0:20:24 > 0:20:29'Will he fare any better under questioning from Peter Jones?'
0:20:31 > 0:20:37- I think it's quite appropriate that you've brought in a sign with "Dragons Court" on it.- Yeah.
0:20:37 > 0:20:41Because if I was a judge, I'd be sentencing you
0:20:41 > 0:20:45to making probably the worst presentation
0:20:45 > 0:20:47that I've ever seen in the den.
0:20:47 > 0:20:51Is there a reason why your pitch was so...
0:20:51 > 0:20:54..slapdash, amazingly average?
0:20:54 > 0:20:57I had it all in my head when I came up the stairs, Peter,
0:20:57 > 0:21:01and it all fell apart as soon as I got to the top of the stairs.
0:21:01 > 0:21:04Could we start again and I just want to see whether you are
0:21:04 > 0:21:09at all interested in engaging in a conversation that actually says,
0:21:09 > 0:21:15"I'm willing to change my pitch and you can invest in the overall business
0:21:15 > 0:21:21- "and have a slice of the overall business, rather than the separation of products."- Yes, I would.
0:21:21 > 0:21:26OK. So let's talk about the future.
0:21:26 > 0:21:30If things go according to plan, based around the current business you've got,
0:21:30 > 0:21:34what is your current forecast for the next 12 months?
0:21:34 > 0:21:37I would expect to turnover £1.1 million, £1.2 million.
0:21:37 > 0:21:40And what do you think your gross profit will be?
0:21:40 > 0:21:45I'd be looking at 100 to 120 gross.
0:21:45 > 0:21:49- Gross?- Yeah. Oh, sorry, net. Net, sorry.- What's your gross?
0:21:49 > 0:21:53Erm... Erm...
0:21:54 > 0:21:58If you take the average of the last three years, in percentage terms,
0:21:58 > 0:22:02- what have you made, gross profit, in percentage margin? - We make round about 100 percent.
0:22:02 > 0:22:06- Well, you can't. - Yeah, with overheads, costs.
0:22:06 > 0:22:10- Mark-up.- Sorry?- Margin or mark-up?
0:22:10 > 0:22:14- So your gross margin is around 50 percent?- Double what we...
0:22:14 > 0:22:16- That's 50 percent gross margin. - Yeah.
0:22:21 > 0:22:25'The proposition may have changed, but Alan's nerves have yet to settle.
0:22:25 > 0:22:30'Can Theo Paphitis make sense of the Teessider's business?'
0:22:32 > 0:22:37So 100,000 of the 800,000
0:22:37 > 0:22:39comes from that sign.
0:22:39 > 0:22:42- Where does that other 700,000 come from?- Potentials.
0:22:42 > 0:22:45No, you said your turnover last year was 800,000.
0:22:45 > 0:22:49Yeah, the sign manufacturing as a whole.
0:22:49 > 0:22:51- 700,000...- Because... Hold on, let me just speak.
0:22:51 > 0:22:54- Selling to people like you.- Whoa.
0:22:54 > 0:22:59- At the moment, what you've said to us is you're happy to throw the whole business in.- Yes.
0:22:59 > 0:23:04So now I'm saying, I understand where £100,000
0:23:04 > 0:23:07- of the turnover of your business comes from.- Yes.
0:23:07 > 0:23:11The other 700,000, talk me through it.
0:23:11 > 0:23:14We, er... We're general sign manufacturers.
0:23:14 > 0:23:18- Shop signs?- Shop signs, van signs.
0:23:18 > 0:23:24- Do you have any big repeat customer base?- Yeah, we have a number of big customers, blue-chip companies.
0:23:24 > 0:23:28- And you made 60,000 profit. Have you always made a profit?- Yes.
0:23:28 > 0:23:34- And what's your wages? - I take as I need. I don't have a specific amount that I take.
0:23:34 > 0:23:38OK, just as an example, you made 60,000 profit after how much drawings?
0:23:38 > 0:23:41Erm... I would probably say about 40.
0:23:41 > 0:23:45Alan, in your company accounts, every year at the end of the year,
0:23:45 > 0:23:51you have to state what salary you've taken. You must know what it is. You can't just say, "I just..."
0:23:51 > 0:23:55- What did you take in your last year as a director?- £4,600.
0:23:55 > 0:23:59- £4,600? In the full year?- Mm-hm.
0:23:59 > 0:24:02I thought you said to Theo you took 40,000.
0:24:02 > 0:24:06Yeah, I have a director's loan account that I draw it out of.
0:24:07 > 0:24:10- You've got to clear that. - That's a little bit misleading,
0:24:10 > 0:24:16cos Theo specifically asked you what you were taking from the business.
0:24:16 > 0:24:19And what I was taking from the business was £40,000 a year.
0:24:19 > 0:24:24- But you just answered Duncan £4,000. - No, a wage, £4,000.
0:24:24 > 0:24:28That's a little disingenuous. The information we glean from that
0:24:28 > 0:24:33is you're able to draw £40,000 and it still makes £60,000 profit.
0:24:33 > 0:24:39- Yeah, OK.- Now that is a world of difference from a business that can only afford £4,000 of wages
0:24:39 > 0:24:44and make £60,000 profit. Cos you turn from a business that might have potential
0:24:44 > 0:24:47to a business that's just about paying your wage.
0:24:48 > 0:24:53Alan, your job was to take me down a path that led me to a conclusion
0:24:53 > 0:24:57- that made me want to invest in your business.- Invest, yeah.
0:24:58 > 0:25:03- And you haven't done it.- Aye, I appreciate that entirely.- So I'm out.
0:25:06 > 0:25:09'Confusion reigns in the den
0:25:09 > 0:25:13'and a dazed-looking Alan loses his first Dragon.
0:25:13 > 0:25:17'Theo Paphitis is not looking impressed, either.'
0:25:19 > 0:25:23Alan, in some ways, I can forgive you
0:25:23 > 0:25:27for not knowing all the figures
0:25:27 > 0:25:29like the back of your hand.
0:25:29 > 0:25:36But I don't think there was any doubt in your mind the difference between salary and drawings.
0:25:36 > 0:25:41I wasn't asked that, Theo. I was asked what I took out of the business. But, yeah, misleading.
0:25:41 > 0:25:44Misleading. You were misleading in your answers.
0:25:45 > 0:25:49And, actually, a bright little product.
0:25:51 > 0:25:55Potential. But I'm sorry to say
0:25:55 > 0:25:58you have not covered yourself
0:25:58 > 0:26:02- with too much credibility here today.- I appreciate that.
0:26:02 > 0:26:06So I cannot invest in you.
0:26:06 > 0:26:10- And for that reason, I'm going to say I'm out.- OK.
0:26:10 > 0:26:14- And I didn't mean to be misleading. That's something I had no intention...- Alan.
0:26:15 > 0:26:21If you can't come here and prepare yourself for the interrogation that you know you would get...
0:26:21 > 0:26:24If you're looking at anybody to invest,
0:26:24 > 0:26:27they would be asking for this information.
0:26:28 > 0:26:31So why wasn't you prepared?
0:26:34 > 0:26:37- Er...- And secondly, how do you hope to grow your business
0:26:37 > 0:26:42if you can't even motivate yourself to do what should've been the biggest pitch of your life?
0:26:44 > 0:26:48How on earth do you expect anybody to invest in you,
0:26:48 > 0:26:51your product or this company?
0:26:51 > 0:26:54You would make my foot itch.
0:26:54 > 0:26:58I'm sorry, Alan, it just doesn't go. I'm out.
0:27:02 > 0:27:06'Two more Dragons out, and Alan's changes of investment are looking slim.
0:27:06 > 0:27:12'Will Duncan Bannatyne throw him the financial lifeline he badly needs?'
0:27:15 > 0:27:18I think you would be such hard work, Alan,
0:27:18 > 0:27:21I just can't understand how you work.
0:27:21 > 0:27:25And so for that reason and that reason only, I've got to say I'm out.
0:27:28 > 0:27:32Alan, "Have you got a business that could be invested in?" is the bottom line.
0:27:32 > 0:27:35And I think there lies the biggest issue.
0:27:35 > 0:27:39It is still a quagmire. And I think the only major mistake that you've made,
0:27:39 > 0:27:44and you're going to regret this, is not knowing your core business
0:27:44 > 0:27:46as well as perhaps you should.
0:27:48 > 0:27:51I can't invest in you. I'm out.
0:27:54 > 0:28:00'A devastating end for Alan. It was a shaky start and his pitch never gained momentum.
0:28:00 > 0:28:02'He leaves with nothing.'
0:28:03 > 0:28:06I walked up the stairs and immediately when I was up there,
0:28:06 > 0:28:09all what I had in my head to talk about went.
0:28:09 > 0:28:14We barely touched the products that I brought to show them and hoped that they'd invest in.
0:28:14 > 0:28:18And I came away feeling a complete idiot.
0:28:23 > 0:28:26'The higher the investment an entrepreneur demands,
0:28:26 > 0:28:32'the greater the scrutiny they must expect, because it's the Dragons' own money that's being put at risk.
0:28:32 > 0:28:38'So when Londoner Jonathan Caplan asked for a £275,000 stake
0:28:38 > 0:28:43'in a new poker console, he was on the receiving end of some tough questioning.'
0:28:44 > 0:28:46Our flagship product is the wireless poker controller.
0:28:46 > 0:28:51It's a handheld joystick that enables you to play the poker game in a faster,
0:28:51 > 0:28:57more accurate and more efficient manner. We've currently sold 10,000 to date
0:28:57 > 0:29:01and the product is currently being used in over 25 countries worldwide.
0:29:01 > 0:29:04'It was an assured pitch from the entrepreneur.'
0:29:04 > 0:29:06- Can I use it?- Absolutely. Please.
0:29:06 > 0:29:12'And enthusiastic poker player Duncan Bannatyne enjoyed the demonstration.'
0:29:12 > 0:29:15- Is this a real game?- It's a real game, real money.- This is real?
0:29:15 > 0:29:20You can do everything from the controller. If I turn my finger, the bet goes up and down.
0:29:20 > 0:29:25OK, we want a flush. OK, I've lost. OK.
0:29:25 > 0:29:29'But then the business interrogation commenced.'
0:29:29 > 0:29:33- Jonathan, what did you do before you did this?- I decided to go and start my own company.
0:29:33 > 0:29:40It was an online gaming company, but it took the aspects of what the poker rooms do and...
0:29:40 > 0:29:43- How much money was invested in that company?- £4.8 million.
0:29:43 > 0:29:46You got £4.8 million worth of investment?
0:29:46 > 0:29:50- Mm-hm.- And how much of that company did you own?- Er, about 14 percent.
0:29:50 > 0:29:55- What happened to that company? - As I started the company, I raised the majority of the first money...
0:29:55 > 0:30:01- What happened to it?- At the point that I took the company to, it was successful.- What happened to it?
0:30:01 > 0:30:05- I left before... - Where is that 14 percent today?- They liquidated the company a year ago.
0:30:05 > 0:30:11'In the end, it was Theo Paphitis who summed up the mood in the den.'
0:30:11 > 0:30:18Jonathan, your previous track record shows that I'm likely to lose my money.
0:30:18 > 0:30:24I appreciate I don't have amazing successes to show where I have returns on investment...
0:30:24 > 0:30:27- With all due respect, you have no successes to show.- OK.
0:30:27 > 0:30:31I reckon the odds probably are better just to go to a casino
0:30:31 > 0:30:35and put £275,000 on red or black.
0:30:36 > 0:30:39- I'm out. - OK. Thank you for your time.
0:30:40 > 0:30:46'So far tonight, the entrepreneurs have failed to convince the Dragons to part with their cash.'
0:30:46 > 0:30:50You would make my foot itch. I'm out.
0:30:50 > 0:30:55'To find out what our newest Dragon, Hilary Devey, makes of her experience so far in the den,
0:30:55 > 0:30:58'press the red button at the end of the programme.'
0:31:00 > 0:31:0429-year-old London-based twins Polly and Charlotte Vickery
0:31:04 > 0:31:08are experienced in the fashion sector and they've recently launched their own range.
0:31:08 > 0:31:13But to expand, their company needs investment, and that's where the Dragons come in.
0:31:13 > 0:31:17Will they see potential in these two young entrepreneurs?
0:31:39 > 0:31:44Hi, Dragons. My name's Polly and this is my sister and business partner Charlotte,
0:31:44 > 0:31:48and we're here today to ask you for £65,000 worth of investment
0:31:48 > 0:31:51for 20 percent of our company.
0:31:53 > 0:31:58Since Brat & Suzie launched, we have established a reputation
0:31:58 > 0:32:04for our unique, hand-drawn, illustrated animal T-shirts and tops.
0:32:04 > 0:32:08- Our customers are... Sorry. - 15 to 35-year-olds.- Yep.
0:32:08 > 0:32:12We work with different illustrators to create our one-off, quirky prints
0:32:12 > 0:32:15and we follow the trends.
0:32:15 > 0:32:18We've had great press. We've been in magazines such as Closer,
0:32:18 > 0:32:21Look, Company and Cosmopolitan
0:32:21 > 0:32:24and we're also loved by girl band The Saturdays.
0:32:24 > 0:32:27Since starting trading in 2009,
0:32:27 > 0:32:33we are now in 60 stores as well as a major high-street department store.
0:32:33 > 0:32:37Thank you for listening. We'd now like to invite any questions.
0:32:41 > 0:32:46'A bright pitch from East London twins Polly and Charlotte Vickery.
0:32:46 > 0:32:50'In return for a 20 percent stake in their online and high-street fashion label,
0:32:50 > 0:32:53'they need a £65,000 cash injection.'
0:32:53 > 0:32:58- I notice a few people have got a horse. You've given me a pig. - We thought it was rock 'n' roll.
0:32:58 > 0:33:01'Retail fashion expert Theo Paphitis
0:33:01 > 0:33:05'is first to question the young entrepreneurs.'
0:33:05 > 0:33:07Guys, hello, I'm Theo.
0:33:07 > 0:33:09How many pieces in the range?
0:33:09 > 0:33:12- About 25.- Is that normal?
0:33:12 > 0:33:16- No. Our autumn/winter range is a lot bigger.- Yeah.- Give me numbers.
0:33:16 > 0:33:20- About 35.- And up to this stage,
0:33:20 > 0:33:24- you've just been T-shirts? - And sweatshirts.
0:33:24 > 0:33:31OK. So what makes you comfortable about moving into other products? I assume it's dresses?
0:33:31 > 0:33:34- Dresses, tops.- Tops. - And skirts.- Skirts.
0:33:34 > 0:33:40- Well, most of our customers have asked us for different products. - They want to see a full range.
0:33:40 > 0:33:45And also, I think, with our previous experience dealing with factories,
0:33:45 > 0:33:47we know all the problems that can go wrong.
0:33:47 > 0:33:51- We've dealt with that. - We're quite comfortable with how to move forward.
0:33:51 > 0:33:54What sort of margin are you achieving?
0:33:54 > 0:33:58- 38 percent? - Gross profit is 41 percent.
0:33:59 > 0:34:03And net profit is 15 percent.
0:34:03 > 0:34:07A typical order will be how much presold and how much for stock?
0:34:07 > 0:34:10Probably 80 percent presold
0:34:10 > 0:34:16- and then maybe 10 to 20 percent stock.- So you're not being that adventurous.- No.
0:34:16 > 0:34:19Well, cash flow, isn't it? So we have to be careful.
0:34:22 > 0:34:27'Targeted questioning and detailed responses. It's a good start for the duo.
0:34:27 > 0:34:32'But what of the brand itself? Duncan Bannatyne wants to know.'
0:34:33 > 0:34:37- Erm, Brat & Suzie.- BOTH: Yep.
0:34:37 > 0:34:43- Where did the name come from? - We had two cats when we were little and they were called Brat and Suzie.
0:34:43 > 0:34:46- And we really loved them.- And that became the name of your business.
0:34:46 > 0:34:52- When was the company formed? - Two years ago.- Yeah. - Two years ago?- Yeah.
0:34:52 > 0:34:56- And what was the turnover for the first year?- Er, 77,000.
0:34:56 > 0:34:59We made 9,000 net profit.
0:34:59 > 0:35:01- And the second year?- 105,000.
0:35:01 > 0:35:05And we made 15,000.
0:35:06 > 0:35:09When you say you're in stores, what kind of stores?
0:35:09 > 0:35:15- Independents or chains? - Independents and then Joy and also House Of Fraser.
0:35:15 > 0:35:19- What did you do before?- I used to work in production at River Island,
0:35:19 > 0:35:23- my background is fashion production. - And I was a designer at Miss Selfridge
0:35:23 > 0:35:26and I've worked for high-street suppliers as a designer.
0:35:30 > 0:35:35'The confident fashion twins are going down well in the den.
0:35:35 > 0:35:39'But Peter Jones thinks he's spotted a flaw in their business model.'
0:35:41 > 0:35:44Your gross margin seems to be very low.
0:35:44 > 0:35:48- 41 percent?- Mm. - Yeah, we're working on that.
0:35:48 > 0:35:51Because we don't have the larger orders,
0:35:51 > 0:35:56we're still paying quite a high cost price for our T-shirts.
0:35:56 > 0:35:58But once we get larger orders,
0:35:58 > 0:36:02we'll be able to negotiate better prices with our factories.
0:36:02 > 0:36:07The second issue is the copycats. Cos it means you've got to continue to innovate
0:36:07 > 0:36:13- and come up with new designs. - I think with our design, especially Charlotte's design background,
0:36:13 > 0:36:16we're always moving with the trends anyway,
0:36:16 > 0:36:20so we won't have things on the rails, hopefully, for too long.
0:36:20 > 0:36:25- We'll have new things coming in.- And we do have loyal customers and we're selling it on our personalities.
0:36:25 > 0:36:28And the high street are always going to copy something.
0:36:29 > 0:36:32- So, Polly, Charlotte, hi, I'm Deborah.- BOTH: Hello.
0:36:32 > 0:36:36- What are you paying for your illustrations? - We pay... It's quite small.
0:36:36 > 0:36:40- We pay £20 to each illustrator. - Flat fee.
0:36:40 > 0:36:44We blog about them and we help them out as much...
0:36:44 > 0:36:49- So they see it as a way of getting their illustrations around.- Yeah. - I think it's great.
0:36:49 > 0:36:54- I love the illustrations. - BOTH: Thank you.- But I don't see this
0:36:54 > 0:36:59as a strongly-branded clothing range. I know you'll say it's your illustrations,
0:36:59 > 0:37:04but as Peter said, it's quite easy to find another illustrator and print on a T-shirt.
0:37:04 > 0:37:08So to turn this into a real, "That's brand Suzie,"
0:37:08 > 0:37:12- you need to come up with something a lot stronger.- Yep.
0:37:12 > 0:37:17You've got a good eye, you've got a good turnover, you're in some good shops,
0:37:17 > 0:37:24just keep going at it. But it isn't yet a strong brand. Hone that down so it's got a look.
0:37:24 > 0:37:29- Thank you.- For that reason, I won't be investing. I'm out. - BOTH: Thank you.
0:37:31 > 0:37:35'A first blow to the duo's investment hopes.
0:37:35 > 0:37:38'But four Dragons still remain.
0:37:38 > 0:37:41'Will retail expert Theo Paphitis take a different view?'
0:37:44 > 0:37:47I love seeing new designers.
0:37:47 > 0:37:49I love people who bring out new ranges.
0:37:49 > 0:37:56It's like the life blood of the industry. But I've got to agree with Deborah. I'm looking...
0:37:56 > 0:38:03I think, though, with investment and with going forward, with more time to expand on the range...
0:38:03 > 0:38:05Look. Your margins are rubbish.
0:38:07 > 0:38:10You need to be able to work a lot sharper than that.
0:38:10 > 0:38:15You won't be able to do that without substantially bigger volumes. So for a long time,
0:38:15 > 0:38:19unless you are actually able to get big orders from the multiples,
0:38:19 > 0:38:22you're not going to be able to work those margins down.
0:38:22 > 0:38:25That, necessarily, is not the end of the world.
0:38:25 > 0:38:32Problem is, the name's great but there's no overriding brand yet.
0:38:32 > 0:38:37I think we're close. I think with the magazine coverage, as well, that we've had,
0:38:37 > 0:38:44because it's really hard to reflect the brand just on a rail, here, now.
0:38:44 > 0:38:48- No, it's not. I'm sorry. Remember, that's what you've got.- Yeah. - That is you.
0:38:48 > 0:38:54- And that rail has to represent you and your brand.- Yeah.
0:38:54 > 0:39:00- So I'm out, but real good luck from me.- BOTH: Thank you.
0:39:00 > 0:39:03Charlotte, Polly, you know, the fact is, you're in the industry.
0:39:03 > 0:39:08I'm not. So there's not really anything I can add to your company.
0:39:08 > 0:39:15- Mm-hm.- I can't really bring you any expertise to help you sell your product. So I'm out.
0:39:15 > 0:39:18Polly, Charlotte.
0:39:18 > 0:39:24- I invested in the den in a business with Victoria McGrane called Neurotica.- BOTH: Yeah.
0:39:24 > 0:39:29We're right in talks at the moment about actually having to go in and invest more money today,
0:39:29 > 0:39:33purely on the basis of the fact that as she scaled her business,
0:39:33 > 0:39:38- she can't fulfil the orders...- Yeah. - ..without a fair amount of cash.- OK.
0:39:38 > 0:39:44- It's a capital-intensive business. - Yeah.- It's not something I can invest in so I'm out.
0:39:48 > 0:39:51'Three Dragons walk away from the deal
0:39:51 > 0:39:56'and the crest-fallen twins have just one opportunity left.
0:39:56 > 0:40:00'Can Hilary Devey find a reason to invest?'
0:40:01 > 0:40:05So, it just leaves me. I've had experience in the rag trade.
0:40:05 > 0:40:09And I know how difficult a market it is.
0:40:09 > 0:40:14- But it's so much fun working in the rag trade.- I know so many companies that have gone under.- Mm.
0:40:14 > 0:40:19Come back, go under, come back, so many brands that were top of the...
0:40:19 > 0:40:23But we are sensible. We're not going to do anything irrational.
0:40:23 > 0:40:28I can't think of any other sector that's more high risk
0:40:28 > 0:40:31in every possible facet.
0:40:31 > 0:40:34Down from production, to the logistics of it,
0:40:34 > 0:40:38to the manufacturing, to the sourcing of the garment, to the retailing of the garment,
0:40:38 > 0:40:42- to getting it there in time, you know...- That's all part of the fun.
0:40:42 > 0:40:46Well, it's part of the fun if you're doing it with my money.
0:40:46 > 0:40:51- But it's not part of the fun if it is my money.- Agreed. But we... - I mean, what is your vision?
0:40:51 > 0:40:56We want to get into doing denim, accessories and outerwear, maybe have a shop, and then...
0:40:56 > 0:40:59Oh, God. I was hoping you wouldn't say that.
0:40:59 > 0:41:02I don't think we do want to have a shop. That's her idea.
0:41:02 > 0:41:06- Don't listen to her. - Don't listen to me. - I don't think we should have a shop.
0:41:06 > 0:41:10My heart is saying "I'd really love to work with you, it would be fantastic fun."
0:41:10 > 0:41:17I'm really into fashion. I love it. But my head, commercially, is saying "Wow, Hilary. No! No! No!"
0:41:17 > 0:41:22- But you're both clearly very, very talented girls.- BOTH: Thank you.
0:41:22 > 0:41:26- So I'm out.- Good luck. - Thank you.- Bye.
0:41:28 > 0:41:31'Polly and Charlotte charmed the Dragons,
0:41:31 > 0:41:35'but couldn't convince them there was a big enough financial future for their business.
0:41:35 > 0:41:41- 'They leave with nothing.'- Amazing. All of us really liked them. But they didn't get investment.
0:41:41 > 0:41:44They're not going to be a success this time round. We all recognise that.
0:41:44 > 0:41:49- They only need one bad order and they're finished.- Correct.
0:41:56 > 0:42:02'Other entrepreneurs who tried and failed in the den included Michelle Smith from Dorset.
0:42:02 > 0:42:06'She needed £80,000 for her aptly-named motorbike accessory
0:42:06 > 0:42:10'that gives pillion passengers a more secure ride.'
0:42:10 > 0:42:16StickiButt is a two-part harness system that stops a person from sliding whilst seated.
0:42:16 > 0:42:20Part one is the harness, which is worn by the individual.
0:42:20 > 0:42:24The second part is a seatbelt that fits on the motorcycle.
0:42:24 > 0:42:27'In the absence of a test track...'
0:42:28 > 0:42:31- You're welcome to try and destroy it. - Don't tempt me.
0:42:31 > 0:42:37'..the innovative entrepreneur had an unusual method of demonstrating her product.'
0:42:37 > 0:42:42- Can you do it with no hands?- No! - THEY LAUGH
0:42:44 > 0:42:48'But whereas The Den-Destroyer couldn't fault her invention,
0:42:48 > 0:42:52'the remaining Dragons did destroy Michelle's hopes of investment.'
0:42:53 > 0:42:58You're dealing with such a niche market that it isn't a business.
0:42:58 > 0:43:01You may sell a few, but I don't think
0:43:01 > 0:43:06it's going to keep you in luxury or even comfort. So I'm out.
0:43:07 > 0:43:13'David Baker from West Sussex wanted £150,000 for just ten percent
0:43:13 > 0:43:17'of his modern take on a layout originally patented back in 1878.'
0:43:17 > 0:43:21I've been developing a new style of keyboard for these screens.
0:43:21 > 0:43:27They use a triangular key. This helps to stop hitting two keys at the same time.
0:43:28 > 0:43:33'One multi-millionaire gave a rare glimpse of what he gets up to in his spare time.'
0:43:33 > 0:43:38- How many do you think you can sell? - Well, can you name a popular App? Any one.
0:43:38 > 0:43:42- Angry Birds. - 44 million on the iPhone alone.
0:43:42 > 0:43:45I don't think you can compare that with Angry Birds.
0:43:45 > 0:43:51Not only have we downloaded Angry Birds, we've downloaded Angry Birds Christmas Special, Easter,
0:43:51 > 0:43:54- Angry Birds Guy Fawkes Night. - OK.- There's so many.
0:43:55 > 0:44:00'But it was an angry Dragon who marked the end of David's time in the den.'
0:44:00 > 0:44:05You stand in front of a group of people who could change your life overnight.
0:44:05 > 0:44:09You come in here and you say, "I value this at 1.5 million,
0:44:09 > 0:44:12"although I've only got £1,200 of turnover."
0:44:12 > 0:44:17Well, if you would like to, sort of, put forward what you deem to be a better offer...
0:44:17 > 0:44:22Listen, I wouldn't give you £150,000 for 100 percent of it at the moment!
0:44:22 > 0:44:28- And therefore, the next two words that come out of my mouth are... - I'm out?- I'm out.
0:44:28 > 0:44:30Didn't even need a predictive text.
0:44:33 > 0:44:38Entrepreneurs often have ideas for businesses from their own hobbies.
0:44:38 > 0:44:44Former fireman Andy Bates from Suffolk turned his passion for motor racing into his own company.
0:44:44 > 0:44:48Now he wants a Dragon on board to help bring his latest development to market.
0:45:17 > 0:45:23My name is Andy Bates and I'm here today to ask you for an investment of £50,000
0:45:23 > 0:45:27for ten percent of the equity in my company, AB Performance Ltd.
0:45:27 > 0:45:32I set the company up after a high-speed racing accident effectively ended my racing career,
0:45:32 > 0:45:35and my Fire Service career of 24 years.
0:45:35 > 0:45:39During some long, enforced days in hospital, I had time to consider the future.
0:45:39 > 0:45:42The area that interested me was motorsport.
0:45:42 > 0:45:47At the same time, British motor racing circuit owners were throwing their doors open to the public.
0:45:47 > 0:45:51Anyone could take to the track in the car of their choice.
0:45:51 > 0:45:56It became obvious to me that the bike-powered car had a large part to play in all of this.
0:45:56 > 0:46:01Relatively low build costs, and the ability to out-accelerate, out-brake
0:46:01 > 0:46:05and out-turn many factory supercars costing ten times the amount.
0:46:05 > 0:46:09So, first came my engine business.
0:46:09 > 0:46:12Sourcing, supplying, importing, stripping,
0:46:12 > 0:46:17rebuilding and tuning superbike engines specifically for use in cars.
0:46:17 > 0:46:23The next logical step was Sabre. Take all of the information and produce our own factory supercar.
0:46:23 > 0:46:29Sabre, at its first race this year, went from position 26 to position two in 18 laps.
0:46:29 > 0:46:34Thank you very much for your time and I'd like to open the floor to questions now.
0:46:34 > 0:46:36- Can I have a look?- Yes.
0:46:39 > 0:46:43'An eye-catching pitch from automobile enthusiast Andy Bates.
0:46:43 > 0:46:47'He's hoping that by having two sides to his business,
0:46:47 > 0:46:51'manufacturing racing cars, as well as servicing the motorbike engines,
0:46:51 > 0:46:56'he'll tempt the Dragons to invest £50,000 for a ten percent stake.
0:46:56 > 0:47:00'Something seems to have intrigued Duncan Bannatyne.'
0:47:03 > 0:47:06Andy, tell me a little bit more about your accident.
0:47:06 > 0:47:10Erm, I basically ran out of talent.
0:47:10 > 0:47:16I made a mistake one day and hit the wall at Oulton very, very fast. I broke my spine in four place,
0:47:16 > 0:47:22- and basically shattered my right knee.- How long did it take you to recover?- About two years.
0:47:22 > 0:47:27- And when you were racing, was it part-time and you were also a full-time fireman?- Yeah.
0:47:27 > 0:47:33When I then went back, I had to prove that I was physically fit enough to do the operational side of the job.
0:47:33 > 0:47:36I knew the damage to my right knee was the big problem.
0:47:36 > 0:47:40So I basically went out on ill-health in the end.
0:47:40 > 0:47:44- Right.- This business came as a change I wasn't expecting.
0:47:44 > 0:47:48I'd worked for the Fire Service for so long, I think you start thinking,
0:47:48 > 0:47:50"Cos I've done this for so long, it's all I can do."
0:47:50 > 0:47:55I had to find something and the only thing I knew how to do was motorsport.
0:47:57 > 0:48:03'A compelling story from the passionate entrepreneur. But what of his company?
0:48:03 > 0:48:08'Theo Paphitis is next to cross-examine the Suffolk-based race engineer.'
0:48:11 > 0:48:15- Andy. I'm Theo.- Pleased to meet you.
0:48:15 > 0:48:18Before I get to the serious questions,
0:48:18 > 0:48:21what's its 0 to 60, 0 to 100?
0:48:21 > 0:48:25- Probably around about 3.6 to 3.8 second mark.- OK. That's the 60?
0:48:25 > 0:48:29- Yeah. - OK. You haven't given me a price.
0:48:29 > 0:48:33To give you an example, this car here retailed at £25,000.
0:48:33 > 0:48:36- What chassis have you got them on? - We make our own.
0:48:37 > 0:48:41You said the investment is to go into your main holding company.
0:48:41 > 0:48:44- Yes.- How long have you had that, and what's the numbers on that?
0:48:44 > 0:48:49If I can give you the background that led to where I am now. Five years trading as a sole trader,
0:48:49 > 0:48:51during which time, total turnover
0:48:51 > 0:48:53£630,000,
0:48:53 > 0:48:58of which I generated £67,000 net profit.
0:48:58 > 0:49:02I didn't see the profits I should've because I ploughed it into this project.
0:49:03 > 0:49:06This year, I changed the company to a limited company,
0:49:06 > 0:49:10I've got fixed assets of about £120,000,
0:49:10 > 0:49:15- and I've got work in progress in the unit valued at £15,000 at the moment. - OK.
0:49:15 > 0:49:19What do you think I, or any of the other Dragons,
0:49:19 > 0:49:22can add to your business?
0:49:22 > 0:49:26Er, if I'm totally honest with you, I have a very, very high understanding of this,
0:49:26 > 0:49:32of this, the mechanics of all of this. The business lessons have come hard and fast,
0:49:32 > 0:49:36I was never a businessman. I know I can make money doing it.
0:49:36 > 0:49:41What I am looking at now is getting somebody on board who has an interest in the company,
0:49:41 > 0:49:44and helping me push it to what I know the next level is.
0:49:46 > 0:49:51'Fluent and articulate responses. The Dragons have certainly warmed to Andy.
0:49:51 > 0:49:56'Now Peter Jones wants to drill down into the company financials.'
0:49:59 > 0:50:03Hi, Andy, I'm Peter. Erm, compelling pitch from a visual perspective.
0:50:03 > 0:50:07I love cars. You're taking a passion, a love.
0:50:07 > 0:50:10The reality is now you're getting to a stage where,
0:50:10 > 0:50:15"How do I turn this into some sort of business that is going to give me a bit of a future?"
0:50:15 > 0:50:17You know, where could this go?
0:50:17 > 0:50:22- Where is the money? - My projections are as follows. I've assumed ten percent growth,
0:50:22 > 0:50:26I've based it on the sale of two cars in year one,
0:50:26 > 0:50:29five cars in year two...
0:50:29 > 0:50:33- Give me a profit number. - The first four months of the year are usually quietest.
0:50:33 > 0:50:38- I've had my best four months of trading this year.- OK.
0:50:38 > 0:50:41So I think we will turnover £200,000 this year
0:50:41 > 0:50:45- and I will make £40,000 net profit. Year two...- Hang on, hang on!
0:50:45 > 0:50:50You sell the cars at £25,000 each. You're only going to sell two. That's £50,000.
0:50:50 > 0:50:56- Where's the other £150,000 coming from?- From the rest of the business, it's investment in the whole company.
0:50:56 > 0:50:59So where's the rest of the business, in terms of that profit, that 150K?
0:50:59 > 0:51:03I've already turned over 60,000 in the first four months of this year.
0:51:03 > 0:51:08- And what else do you do? - Servicing, tuning, rebuilds of cars that have crashed.
0:51:08 > 0:51:13Anything to do with racing, driving bike-engine cars, we do at AB Performance.
0:51:15 > 0:51:18'A quick-fire exchange
0:51:18 > 0:51:22'and Andy seems as knowledgeable about his numbers as he is with his engines.
0:51:22 > 0:51:25'But he is yet to receive an offer.
0:51:25 > 0:51:29'Has Hilary Devey heard enough to part with £50,000?'
0:51:33 > 0:51:35Andy.
0:51:36 > 0:51:39Have you thought of any other markets for this?
0:51:39 > 0:51:42Yes. I've got a chap in America
0:51:42 > 0:51:47who's been asking questions about, "What are we doing with the car? Could we get one?"
0:51:47 > 0:51:49A guy in Switzerland has enquired about it,
0:51:49 > 0:51:55but it's not cast in stone, and I wouldn't dare say, "Look, we've got a marketplace."
0:51:57 > 0:51:59OK.
0:52:00 > 0:52:04I'm struggling to find a bigger market than what you're currently looking at.
0:52:06 > 0:52:10- I mean, they can't be used as a road car, can they?- Yes, you could have this car on the road.
0:52:10 > 0:52:14As long as we comply with emissions, the position of the lights.
0:52:14 > 0:52:17- This one's too low. We'd have to jack this up a bit.- How safe is it?
0:52:17 > 0:52:21We have an issue with the fact that we've got to make the bodywork lighter,
0:52:21 > 0:52:25I wouldn't compromise the chassis. It's a fully-triangulated chassis. The side...
0:52:25 > 0:52:29You've lost me now. I haven't got the slightest clue what you're talking about.
0:52:30 > 0:52:37It's not really my market, and what worries me more is what could I bring to you.
0:52:38 > 0:52:39- I'm out.- Thank you very much.
0:52:42 > 0:52:49'Andy's impressive run comes to an end, as Hilary Devey fails to spot money-making potential.
0:52:49 > 0:52:52'Will Deborah Meaden find a reason to invest?"
0:52:55 > 0:52:57Andy.
0:52:57 > 0:53:00How many of this type of car will be in existence right now?
0:53:00 > 0:53:06Right now, there's no way of putting a number on the bike-engine cars that are used on the road.
0:53:06 > 0:53:08Race series, there are probably
0:53:08 > 0:53:12400 or 500 serious race cars
0:53:12 > 0:53:16with bike engines that I'm aware of. I think it's a market that will increase.
0:53:16 > 0:53:20I've got to say, you come across really well,
0:53:20 > 0:53:25but the trouble is, you haven't been able to show a clear way
0:53:25 > 0:53:29to make money with this car. So, I'm sorry, for that reason, I'm out.
0:53:29 > 0:53:31Thank you for your time, I appreciate it.
0:53:31 > 0:53:33Andy.
0:53:34 > 0:53:37You sound great, you're having a ball.
0:53:37 > 0:53:40You're looking for a partner, not just a financial partner,
0:53:40 > 0:53:44you're looking for a pretty hands-on partner.
0:53:44 > 0:53:49I'd have to be spending more time with you and your business than I spend on my own business.
0:53:49 > 0:53:54- Fine.- So I'm going to wish you the best of luck, I'm out.
0:53:57 > 0:54:00'Two more Dragons walk away from the deal.
0:54:00 > 0:54:05'But has Peter Jones spotted an opportunity where his rivals have not?'
0:54:11 > 0:54:14Andy. I love your honesty.
0:54:14 > 0:54:20And you've been very straight in terms of how you got to this stage.
0:54:21 > 0:54:27But it's a pretty limited market, so you're going to need a lot of time, or at least...
0:54:28 > 0:54:34..a lot of effort in turning what you've currently got and making it into a business.
0:54:34 > 0:54:39And I think that makes it, unfortunately, a very difficult decision for anybody to invest.
0:54:41 > 0:54:43That's where it kind of falls down.
0:54:44 > 0:54:46Erm...
0:54:48 > 0:54:51But it also falls up, in terms of...
0:54:53 > 0:54:58..I've got some thoughts, of what could be done, and...
0:55:00 > 0:55:02..I am annoyingly into cars,
0:55:02 > 0:55:05and I'm not being blinded by it,
0:55:05 > 0:55:08but I have got some ideas.
0:55:11 > 0:55:14So, I've decided to make you an offer...
0:55:14 > 0:55:16Thank you.
0:55:18 > 0:55:20..for all of the money.
0:55:25 > 0:55:30But in return, I want 35 percent of your business.
0:55:35 > 0:55:37Right. OK.
0:55:40 > 0:55:45'A dramatic about-turn and Andy's thrown a financial lifeline.
0:55:45 > 0:55:51'But Peter Jones is demanding three-and-a-half times the equity originally on offer.
0:55:51 > 0:55:57'With one more Dragon remaining, can the likeable entrepreneur negotiate himself a better deal?'
0:55:58 > 0:56:02Andy. I'm really surprised that Peter made you an offer
0:56:02 > 0:56:07without getting a second and third years' turnover and profits.
0:56:07 > 0:56:11- So what are they? - Second year was £300,000,
0:56:11 > 0:56:14- net profit at £60,000.- Yep.
0:56:14 > 0:56:20And year three, £500,000 turnover, with a net profit of £100,000.
0:56:24 > 0:56:26So I am going to make you an offer.
0:56:28 > 0:56:32But I want a higher percentage.
0:56:35 > 0:56:38I'll offer you £50,000,
0:56:38 > 0:56:40but I want 50 percent of the business.
0:56:40 > 0:56:44But, you reach those projections over the next three years
0:56:44 > 0:56:47and I'll reduce that to 25 percent.
0:56:55 > 0:56:57Thank you.
0:57:00 > 0:57:04Sorry. I wasn't expecting to have one offer, let alone two on the table.
0:57:25 > 0:57:27I think I'd like to take your offer, Peter.
0:57:28 > 0:57:31- Thank you very much. Appreciate it. - You're welcome.
0:57:31 > 0:57:36- Well done. Fantastic! - 'Andy has done it! The investment comes at a price,
0:57:36 > 0:57:41'but he walks away with the backing of a passionate and influential Dragon on board.'
0:57:44 > 0:57:48Well, Andy, well done! Tell me why you took Peter's offer rather than Duncan's,
0:57:48 > 0:57:51cos Duncan's could have been better if you met all your targets.
0:57:51 > 0:57:55Well, I did some research going in, knew Peter's interest in motorsport.
0:57:55 > 0:57:58I think for what we need, you need passion,
0:57:58 > 0:58:01and I wanted Peter on board, really, to drive the project.
0:58:01 > 0:58:06So the offer was a bit tighter, but I think he's the man we needed in place.
0:58:14 > 0:58:20They say that perseverance pays, and it certainly has for Andy Bates.
0:58:20 > 0:58:23Five years of hard graft building up his business,
0:58:23 > 0:58:28and he had two multi-millionaire investors vying for a share in his company.
0:58:28 > 0:58:33To hear more from the entrepreneurs about their time in the den, press the red button now.
0:58:33 > 0:58:37You can also visit our website, bbc.co.uk/dragonsden
0:58:37 > 0:58:39Goodbye.
0:58:39 > 0:58:43'Next time on Dragons' Den.'
0:58:43 > 0:58:46- A fatality has happened in the den. - Duh-duh-duh!
0:58:46 > 0:58:50- How much money have you put into this business?- £200,000.- Oh, my God!
0:58:50 > 0:58:54You can see it going, "Tweeky-weeky-weeky-whoo!"
0:58:54 > 0:58:57Shouldn't you have investigated why your turnover's growing
0:58:57 > 0:59:01- but your profitability's remaining static?- Perhaps, yeah.
0:59:01 > 0:59:03I like the product. I'll make you an offer.
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0:59:10 > 0:59:14E-mail subtitling@bbc.co.uk