0:00:24 > 0:00:31These are the Dragons, five of Britain's wealthiest and most enterprising business leaders.
0:00:31 > 0:00:37Over the coming weeks, they'll make or break the dreams of dozens of budding entrepreneurs.
0:00:40 > 0:00:47If I put £50,000 into this, there's a very, very high percentage chance that I'll lose it.
0:00:47 > 0:00:53The great news is that the world isn't short of musical talent, so I'm back to "why you"?
0:00:53 > 0:00:59- I won't invest in the world's most expensive beehive.- I won't make you an offer on the terms you ask for.
0:00:59 > 0:01:02Frankly, the beast doesn't change.
0:01:02 > 0:01:06When that beast is hungry, it wants feeding.
0:01:10 > 0:01:16The multi-millionaire investors have each built up their fortunes from scratch.
0:01:17 > 0:01:20Hotel and health club owner Duncan Bannatyne,
0:01:20 > 0:01:24leisure industry expert Deborah Meaden,
0:01:24 > 0:01:27retail magnate Theo Paphitis,
0:01:27 > 0:01:30telecoms giant Peter Jones...
0:01:31 > 0:01:37..and Hilary Devey who made her millions in the haulage industry.
0:01:37 > 0:01:44The Dragons have the credentials, the contacts, the commitment and the cash ready to invest,
0:01:44 > 0:01:50but only in the right business. Will any of these hopeful entrepreneurs walk away with their money?
0:01:57 > 0:02:00Welcome to the Dragons' Den.
0:02:00 > 0:02:04We have a succession of entrepreneurs keen to do business
0:02:04 > 0:02:07with our five multi-millionaire investors.
0:02:07 > 0:02:09There is just one challenge.
0:02:09 > 0:02:13They have to convince the Dragons their ideas will make money.
0:02:13 > 0:02:17Only the best will succeed. The rest will walk away empty-handed.
0:02:17 > 0:02:21It is the Dragons' own money that is being invested in the Den,
0:02:21 > 0:02:24so don't be surprised if they ask searching questions.
0:02:24 > 0:02:28Will our first entrepreneurs convince them to invest?
0:02:47 > 0:02:53Hi, Dragons. I'm Ryan Ashmore and this is my business partner Liam Webb.
0:02:53 > 0:02:56Together we run a record label called RKA Records
0:02:56 > 0:03:01and we're looking for an investment of £50,000 for a 15% share in our company.
0:03:01 > 0:03:06The company was formed in October 2010. Since then, a lot has happened.
0:03:06 > 0:03:10We've signed two great artists who are working on their debut albums.
0:03:10 > 0:03:15Chris and Marq live in Germany and we try to travel there at least once a month.
0:03:15 > 0:03:19It's also worth noting that all of our artists... Sorry, um...
0:03:20 > 0:03:22(Scarlette.)
0:03:22 > 0:03:26We're in the process of signing an artist called Scarlette.
0:03:26 > 0:03:32Scarlette has received great reviews from leading promotion companies, as well as multi-platinum producers.
0:03:32 > 0:03:35Here you can see some pictures of our artists.
0:03:35 > 0:03:38Each artist has a very marketable style and look
0:03:38 > 0:03:44and this, combined with their musical ability, makes us believe that success is inevitable.
0:03:44 > 0:03:51We have a passion for music and business and our skills match those of business people twice our age.
0:03:51 > 0:03:57Thank you for listening to our pitch. We'll play a medley of tracks for you to listen to.
0:03:57 > 0:04:00MUSIC: "Slowdown" - Scarlette
0:04:00 > 0:04:05# Ain't gonna stop cos no-one's gonna live for ever... #
0:04:05 > 0:04:09# What was the reason? Why are you leaving?
0:04:09 > 0:04:11# Victim to the sword... #
0:04:13 > 0:04:15MUSIC: "L.O.U.D" - Chris Parham
0:04:15 > 0:04:20# Metal chains, insane, silver-blue strobe light, do it just the way you like... #
0:04:20 > 0:04:24Please feel free to ask any questions.
0:04:25 > 0:04:30Aspiring music moguls Ryan Ashmore and Liam Webb from Leicestershire
0:04:30 > 0:04:36are hoping their new record label will catch the Dragons' attention and a £50,000 cash injection.
0:04:37 > 0:04:41In return, 15% of their business is on offer.
0:04:41 > 0:04:43Hilary Devey looks intrigued.
0:04:47 > 0:04:50- How old are you?- We're both 18.
0:04:50 > 0:04:54- Well done.- Thank you.- Well done.
0:04:54 > 0:04:57Tell me how you got into this business.
0:04:57 > 0:04:59Back in school, a friend was in a band.
0:04:59 > 0:05:04I've always wanted to work in music. He said, "Why don't you manage us?"
0:05:04 > 0:05:10I was quite successful managing them. I got some gigs at some pretty high profile venues.
0:05:10 > 0:05:14Last summer, I was holidaying in Spain and I met Marq.
0:05:14 > 0:05:20And as soon as I heard him, I thought, "I need to start this again."
0:05:20 > 0:05:25We worked with him for a week or two in his home studio and we met Chris as well.
0:05:25 > 0:05:29- We loved both of them. We wanted to sign both of them. - We drew up the contracts.
0:05:29 > 0:05:35- Did you get lawyers to draw them contracts up?- Lawyers checked over them in Germany.
0:05:35 > 0:05:39We managed to work out a very good percentage deal on our part.
0:05:39 > 0:05:43We receive 80% and they get 20.
0:05:43 > 0:05:48We asked them what they feel would be fair
0:05:48 > 0:05:51and they were extremely happy with 20%.
0:05:53 > 0:05:56- I'm surprised.- We were.
0:05:56 > 0:06:03It's rare for entrepreneurs to impress a Dragon with their negotiating prowess,
0:06:03 > 0:06:06but that's what Ryan and Liam have just achieved.
0:06:06 > 0:06:11Now Duncan Bannatyne wants to drill down into the financials.
0:06:12 > 0:06:14OK, gentlemen...
0:06:14 > 0:06:18Have you produced any records? Have you had any income yet?
0:06:18 > 0:06:23We've released two singles. We haven't got the sales data for the second single yet.
0:06:23 > 0:06:27The first single was a test cos we were new to the business.
0:06:27 > 0:06:30We got it to a distributor, we got it on iTunes.
0:06:30 > 0:06:33Have you started any other businesses?
0:06:33 > 0:06:36I used to have a mobile disco company.
0:06:36 > 0:06:39- Yeah.- I started that when I was 12.
0:06:39 > 0:06:41How much did you make?
0:06:41 > 0:06:44I'd say around 25,000 to 30,000.
0:06:44 > 0:06:49- What did you do with that? - It's been spent.- Right, OK.
0:06:49 > 0:06:52Where is the company based?
0:06:52 > 0:06:56- At my home.- So it's in your bedroom? - Basically, yeah.
0:06:56 > 0:07:02- No expenses really?- Our overheads are about £2.80 a month on hosting. - Hosting for the website.
0:07:07 > 0:07:11A level-headed manner and a thrifty approach to business -
0:07:11 > 0:07:15the teenage entrepreneurs are charming the multi-millionaires.
0:07:15 > 0:07:19But what will Theo Paphitis make of the proposition on offer?
0:07:21 > 0:07:27Now, you're entering into a market that is incredibly competitive, cut-throat.
0:07:27 > 0:07:31You now need to give me a proper reason why I would invest in you.
0:07:31 > 0:07:36If you can be successful in music, there's a lot of money to be made.
0:07:36 > 0:07:43I believe with a record label you've got multiple chances cos you've got more than one artist.
0:07:43 > 0:07:46If one artist, God forbid, fails,
0:07:46 > 0:07:50you've got other artists who can pick it up and support it.
0:07:50 > 0:07:53And Ryan, have you got a reason?
0:07:53 > 0:07:57I'd say the interest that we've received.
0:07:57 > 0:08:01We contacted a very famous multi-platinum producer in LA.
0:08:01 > 0:08:07He's worked with Timbaland, Justin Timberlake, The Jonas Brothers, a lot of kids' pop really.
0:08:07 > 0:08:11Guys, I think I can speak from a little bit of experience,
0:08:11 > 0:08:15being involved in this with Hamfatter.
0:08:15 > 0:08:21It was tough. I'd be intrigued to know... What would you do differently?
0:08:22 > 0:08:25Hamfatter, I'd say, is more of an indie band.
0:08:25 > 0:08:28We've got Chris, Marq and Scarlette.
0:08:28 > 0:08:32We feel the music is a lot like chart music.
0:08:32 > 0:08:38And right now, pop, R&B and dance music is where it's at.
0:08:38 > 0:08:40It's what's commercial.
0:08:40 > 0:08:44And the guy that you've mentioned, what do you think he's going to do?
0:08:44 > 0:08:48I'm guessing he will charge a fee for his services.
0:08:48 > 0:08:52He won't take a percentage because, at the end of the day,
0:08:52 > 0:08:57he works and he needs to charge people or he risks, you know...
0:08:57 > 0:09:04I'll tell you exactly what he'll do. He'll charge you a minimum retaining fee to take the work on of 20,000.
0:09:04 > 0:09:11He's then going to start to charge you studio time for hiring out his studio to make these tracks.
0:09:11 > 0:09:17You'll then fly your artists out there and you'll incur expenses. It'll cost you about 45,000-50,000.
0:09:18 > 0:09:22This is one of the hardest industries to crack
0:09:22 > 0:09:26and the number of people that succeed in this marketplace
0:09:26 > 0:09:29are literally counted on both your hands.
0:09:31 > 0:09:37You're really going to struggle in this. I'm going to wish you guys the best of luck, but I'm out.
0:09:37 > 0:09:39- Thank you.- Thanks a lot.
0:09:40 > 0:09:45A first blow as Ryan and Liam's business naivety is exposed.
0:09:45 > 0:09:49Deborah Meaden is next to interrogate the duo.
0:09:50 > 0:09:53Ryan, Liam, hi, I'm Deborah.
0:09:53 > 0:09:54Um...
0:09:54 > 0:09:59I get quite a bit of music pitched to me
0:09:59 > 0:10:03and I always think whether I like it or not isn't the issue.
0:10:03 > 0:10:10The issue is - is it right, is it the right market, does it appeal? So why you?
0:10:10 > 0:10:16We're extremely dedicated to this. We don't hold down commitments, we're not married, we don't have families.
0:10:16 > 0:10:22OK, that's the way you are, but what have you got that's different?
0:10:22 > 0:10:24I'd have to say the artists we have.
0:10:24 > 0:10:29Liam, the great news is that the world isn't short of musical talent,
0:10:29 > 0:10:31so I'm back to "why you"?
0:10:31 > 0:10:36We... We're only young. We don't have life experience.
0:10:36 > 0:10:40But we are trying exceptionally hard.
0:10:40 > 0:10:44Ryan, I'm going to be really tough on you now.
0:10:44 > 0:10:49You're struggling to look at us. You're struggling to... And that's what you've got to do.
0:10:49 > 0:10:55To get out there and get this music heard, you'll have to knock down doors and not take no for an answer.
0:10:55 > 0:11:00- You are really going to have to work at it.- We're just a bit overawed.
0:11:00 > 0:11:04- We are willing to do that.- You can't be. You cannot be overawed.
0:11:04 > 0:11:08- Particularly the environment you're going into.- Yeah.
0:11:08 > 0:11:12The people who have succeeded are the people who just grab hold of it
0:11:12 > 0:11:17and say, "I don't care how old I am, I am going to make this happen."
0:11:17 > 0:11:19I don't get that from you two guys.
0:11:19 > 0:11:24- OK.- OK.- So I won't be investing in you. I'm out.- Thank you.
0:11:24 > 0:11:26Thank you. Thanks a lot.
0:11:29 > 0:11:30Right...
0:11:30 > 0:11:36Lots of young people making it in this market, lots of young people failing in this market.
0:11:36 > 0:11:39You might get there. Then again, you might not.
0:11:39 > 0:11:46But you're a long way from me investing 50,000 quid.
0:11:47 > 0:11:51- For any percentage of the business. - Yeah.
0:11:51 > 0:11:55- So, chaps, I'm out. - Thank you.- Thank you.
0:11:55 > 0:11:58What really concerns me is that business
0:11:58 > 0:12:03- has to be fair and equitable for all parties.- Yeah.
0:12:03 > 0:12:08You've got three artists signed where you're taking 80%.
0:12:08 > 0:12:14Don't you think if they was successful, that relationship would turn sour very quickly?
0:12:14 > 0:12:17I think if it turned successful,
0:12:17 > 0:12:20we would try our very best to keep them with us.
0:12:20 > 0:12:23But how are you going to manage that?
0:12:23 > 0:12:27- Will you say, "I got the percentage wrong in the first place"?- Yeah.
0:12:27 > 0:12:30It's not good business sense, is it?
0:12:30 > 0:12:34It would be a very short-term relationship, I feel.
0:12:34 > 0:12:39- Yeah.- And what worries me is what then follows.
0:12:39 > 0:12:44So because of that, I've got to say I'm out.
0:12:46 > 0:12:50Three Dragons out in quick succession.
0:12:50 > 0:12:54The duo's Den dreams now rest solely with Duncan Bannatyne.
0:12:54 > 0:13:00Will he see anything in the youngsters that is worth a £50,000 investment?
0:13:07 > 0:13:09I don't know. I'm not sure.
0:13:10 > 0:13:15I'm thinking, you know, if I put £50,000 into this,
0:13:15 > 0:13:19there's a very, very high percentage chance that I'll lose it.
0:13:19 > 0:13:23There is still a huge amount of money to be made in music.
0:13:23 > 0:13:26When would you see some revenue?
0:13:26 > 0:13:31If we get promotion behind it and the single takes off, everyone loves it,
0:13:31 > 0:13:34it can easily make 100K in a couple of weeks.
0:13:34 > 0:13:37- So you get 80%?- Yeah.
0:13:37 > 0:13:42- Normally, it's split 50/50. - If they were happy with it, we were happy with it.
0:13:49 > 0:13:54I'm going to make you an offer that's better than the offer you made to the artists. OK?
0:13:58 > 0:14:02I'm going to offer you the full amount of the money.
0:14:02 > 0:14:05I want 79% of the company.
0:14:12 > 0:14:16- Could we just have a chat? Is that all right?- Yeah, sure.
0:14:20 > 0:14:24- We've got to take the opportunity. - Yeah?
0:14:24 > 0:14:26We'd like to accept your offer.
0:14:26 > 0:14:29APPLAUSE
0:14:30 > 0:14:35Ryan and Liam have done it. It was one of the most surprising about-turns in the Den,
0:14:35 > 0:14:41but they leave with the backing of an experienced, multi-millionaire business partner.
0:14:44 > 0:14:47Well, Liam, Ryan, what have you just done?
0:14:47 > 0:14:53It was a big decision, but if we went out of here with an offer and we didn't accept it, we'd regret it.
0:14:53 > 0:14:59If we can get mentored by one of the most successful businessmen in the country...
0:14:59 > 0:15:05Once he puts that offer out there, you bite his hand off. We're now in business with Duncan Bannatyne.
0:15:05 > 0:15:09- It will be an interesting adventure. Good luck.- Thank you.
0:15:15 > 0:15:19Many entrepreneurs who come into the Den hope that a good demonstration
0:15:19 > 0:15:22will give them a better chance of investment.
0:15:22 > 0:15:26Yasmin Hussain needed £65,000 to expand her new business
0:15:26 > 0:15:31and brought along a couple of young friends to help her out.
0:15:31 > 0:15:35My company merchandises tri-namic balls.
0:15:35 > 0:15:39It's an in-car accessory, so it can be hung from the rear-view mirror.
0:15:39 > 0:15:45It's also a desktop accessory and it's also a real ball for play purposes.
0:15:46 > 0:15:48DANCE MUSIC
0:15:55 > 0:15:59As you might expect, the Dragons can be pretty hard to impress.
0:15:59 > 0:16:02I didn't quite get the dance with the ball.
0:16:02 > 0:16:08They try to do identical things, one with a conventional size and one with a tri-namic ball.
0:16:08 > 0:16:11- What did you call it?- A tri-namic.
0:16:11 > 0:16:17So, one, hang it in the car, two, put it on your desk and three, use it as a real ball?
0:16:17 > 0:16:19There you are. Easy!
0:16:19 > 0:16:23Sadly for Yasmin, extracting investment wasn't quite so easy.
0:16:23 > 0:16:26I've got about ten of these at home this size.
0:16:26 > 0:16:30- But it's not a tri-namic ball, is it? - No, it's not. It's just...
0:16:30 > 0:16:32A ball.
0:16:32 > 0:16:37In the end, Hilary Devey delivered the difficult business lesson
0:16:37 > 0:16:39to the fledgling entrepreneur.
0:16:39 > 0:16:43- How many have you sold to date? - I've sold 5,500 units.
0:16:43 > 0:16:48So my focus now is for 2012 and the Olympics and Euro 2012.
0:16:48 > 0:16:52Carry on for the Olympics cos I think you'll make a few bob.
0:16:52 > 0:16:57But there's no longevity in the business. For that reason, I'm sorry, I'm out.
0:16:57 > 0:17:00Thank you.
0:17:01 > 0:17:05- They call me Lightning Jones. - Good catch.- Good catch, yeah.
0:17:08 > 0:17:12With the housing market having a tough time at the moment,
0:17:12 > 0:17:18Worcestershire-based salesman Richard Williams and Canadian real estate expert Gil Ostrander think
0:17:18 > 0:17:22they have a concept to give it a real boost. They're next in the Den.
0:17:49 > 0:17:52Hello, Dragons. My name is Richard Williams.
0:17:53 > 0:17:57This is my colleague, Gil Ostrander.
0:17:57 > 0:18:03Gil Ostrander and I have a company called Realtor Network Limited.
0:18:05 > 0:18:07We offer 20% equity
0:18:07 > 0:18:12in exchange for an investment of £50,000.
0:18:13 > 0:18:18Estate agency in the UK today does not work.
0:18:18 > 0:18:20There is a solution.
0:18:20 > 0:18:26Gil Ostrander has built realtor networks for 30 years in North America
0:18:26 > 0:18:30and for 15 years in Europe. Gil?
0:18:30 > 0:18:34The solution is simple and yet radical.
0:18:34 > 0:18:41The paradigm of salaried employees in small, high street locations
0:18:41 > 0:18:44simply must change.
0:18:44 > 0:18:50The UK is the last major country in Europe to not adapt the real estate industry
0:18:50 > 0:18:54to a straight commission model with an active sales force.
0:18:54 > 0:18:59We will establish a multiple listings system
0:18:59 > 0:19:03where one realtor office could list a property
0:19:03 > 0:19:06and another office could sell the property.
0:19:06 > 0:19:11In return for this, they would join our network and pay us a licence fee.
0:19:11 > 0:19:13Any questions are welcome.
0:19:16 > 0:19:23Confident claims from Richard Williams and his experienced business partner Gil Ostrander.
0:19:23 > 0:19:27In a bid to revolutionise the way we buy and sell property,
0:19:27 > 0:19:32the duo need a £50,000 investment and are prepared to offer a 20% stake.
0:19:32 > 0:19:35But Peter Jones looks confused.
0:19:37 > 0:19:40- Richard, Gil, hi, I'm Peter. - Hello, Peter.
0:19:42 > 0:19:44I like the sale board.
0:19:44 > 0:19:51- Yeah, cos "realtor" is like our version of an estate agent in the States, isn't it?- Exactly.- Yes.
0:19:52 > 0:19:56So if you've got all of your realtor agents in your network
0:19:56 > 0:20:00and there is a house that all of them are clearly trying to sell,
0:20:00 > 0:20:05it's one house, and I'm Peter Jones Estate Agents,
0:20:05 > 0:20:10and I have a few spare desks there and a few people from Realtor Network...
0:20:10 > 0:20:15If somebody, wherever they are, they phone through to, say, Tom Hughes,
0:20:15 > 0:20:18and say, "I've got a buyer for you, Tom..."
0:20:18 > 0:20:21So now I've got two of your agents.
0:20:21 > 0:20:23That house is sold
0:20:23 > 0:20:26and I've charged 1.5% commission.
0:20:27 > 0:20:32What does the first agent that found the buyer get?
0:20:32 > 0:20:35- Half of the commission. - So he gets 0.75%?
0:20:35 > 0:20:39- Exactly.- What does Tom Hughes get?
0:20:39 > 0:20:41The other half of the commission.
0:20:41 > 0:20:45- What about poor Peter Jones?- What about Peter Jones, the estate agent?
0:20:45 > 0:20:49OK, maximum half down to 15%.
0:20:49 > 0:20:52So I could get 15% of 1.5%?
0:20:52 > 0:20:54No, of the 0.75.
0:20:54 > 0:21:00I mean, that's hardly even going to pay for the paper to print the documents.
0:21:04 > 0:21:09The enigmatic entrepreneurs seem only to have confounded the Dragons.
0:21:09 > 0:21:12Can Theo Paphitis make sense of the proposition?
0:21:15 > 0:21:19OK, Richard, Gil, you've not thought this through.
0:21:19 > 0:21:22- P Jones owns the office.- Right.
0:21:22 > 0:21:26He's sitting back in his office, waiting to count the money,
0:21:26 > 0:21:32and Tom Hughes says, "I made 1,500 quid, so I'm going to give you 15% of that."
0:21:32 > 0:21:36- 225 quid.- Yeah.- You're absolutely correct.- I'm not finished yet.
0:21:36 > 0:21:42- Neither was I, but go ahead. - Well, I was talking. - Go ahead. Continue, please.
0:21:43 > 0:21:47For his 225 quid, he's run his website...
0:21:47 > 0:21:53- Measured the house.- Measured the house.- Took photographs. - Took photographs. 225 quid?!
0:21:57 > 0:21:58My turn?
0:22:00 > 0:22:02Yes, 225 quid.
0:22:02 > 0:22:04My turn?
0:22:04 > 0:22:09You forgot to mention that Tom Hughes paid him £800 at the beginning of the month
0:22:09 > 0:22:14to cover his fair share of that rent and that sign and that electricity.
0:22:18 > 0:22:23The other thing is that you could have 30 guys doing this for you.
0:22:23 > 0:22:27And 30 guys times 225 quid, if they did it every day,
0:22:27 > 0:22:30starts to be an interesting business model.
0:22:34 > 0:22:40An uncomfortable exchange perhaps, but finally, some light is shed on the business model on offer.
0:22:40 > 0:22:44Duncan Bannatyne is next to interrogate the duo.
0:22:46 > 0:22:52Right, the market is low at the moment. The market is slow with houses.
0:22:52 > 0:22:57- Mm-hm.- So it doesn't matter how you're selling.
0:22:57 > 0:23:00It doesn't matter how good you are.
0:23:00 > 0:23:02If nobody's buying, you won't sell.
0:23:02 > 0:23:06I agree, except for the fact that 650,000 people bought last year.
0:23:06 > 0:23:09- Where?- In the UK.
0:23:09 > 0:23:13- How many bought in America? - I don't know. Why do we want to talk about that?
0:23:13 > 0:23:17Because you said this is how they sell in America
0:23:17 > 0:23:21and we're going to bring it to the UK and use this method in the UK.
0:23:21 > 0:23:23I don't understand your point.
0:23:23 > 0:23:29Do you think the American real estate market has collapsed in the last two years?
0:23:29 > 0:23:33- I don't really care. That's not my question.- Nor do I. That's MY point.
0:23:35 > 0:23:39Right, you could be reasonable and answer a reasonable question.
0:23:39 > 0:23:43That's entirely up to you. But I tell you, whatever you do, I'm out.
0:23:47 > 0:23:53An infuriated Duncan Bannatyne refuses to do business with Gil and Richard
0:23:53 > 0:23:55and walks away from the deal.
0:23:55 > 0:24:00Will Hilary Devey be able to bring some calm to proceedings?
0:24:01 > 0:24:05Years and years and years and years, too many years to mention,
0:24:05 > 0:24:08I used to recruit and run direct sales forces.
0:24:08 > 0:24:13Today, it is, I would say, nigh-on impossible
0:24:13 > 0:24:19to recruit direct sales people to work on a commission-only basis
0:24:19 > 0:24:21in the UK.
0:24:21 > 0:24:27I've been hearing those words for 30 years in every country I've worked in.
0:24:27 > 0:24:32All I can tell you is 25 years ago, I did it, and today, I'd have a problem
0:24:32 > 0:24:38in lending my name because ultimately, I know the scams they got up to to earn that commission.
0:24:38 > 0:24:44You are describing the real estate industry I joined 40 years ago. It was an industry of pirates.
0:24:44 > 0:24:50What we did by introducing some of the changes that we're talking about here,
0:24:50 > 0:24:57- codes of ethics, more effective training, showing them how to make their money correctly...- OK.
0:24:57 > 0:25:02- By doing that, we changed that industry into a profession. - OK.- I was part of that.- Gil...
0:25:02 > 0:25:08- I'm a refugee of that. Sorry. - God gave you one of these and two of these. Use them wisely.
0:25:08 > 0:25:11- I'm trying. Go ahead. - Do you know what?
0:25:11 > 0:25:15The beast doesn't change. When that beast is hungry, it wants feeding.
0:25:15 > 0:25:20And by God, somehow or other, they'll find a scam to get fed.
0:25:20 > 0:25:22I'm out.
0:25:24 > 0:25:29Discord over the business model and discontent with the entrepreneur's manner
0:25:29 > 0:25:33results in the loss of a second Dragon.
0:25:33 > 0:25:37Now will Deborah Meaden agree with her rival investor's concerns?
0:25:39 > 0:25:42OK, um, this model works in the States.
0:25:42 > 0:25:47I think the problem is the mindset is different between the States and here
0:25:47 > 0:25:51and without the protections of licensed agents,
0:25:51 > 0:25:57I think there will be a problem convincing people in the UK this is a model they want to shift to.
0:25:57 > 0:26:01If I'm wrong about that, you're talking to the wrong person in me.
0:26:01 > 0:26:05You should be talking to some of the big operators,
0:26:05 > 0:26:11but I'm not convinced that they will adopt it because the way we sell properties is deeply embedded.
0:26:11 > 0:26:15- So for those reasons, I'm out. - Thank you.
0:26:15 > 0:26:22Richard, Gil, in America it is very typical to charge for the sale of your house
0:26:22 > 0:26:24between 4 and 8%.
0:26:24 > 0:26:30And the reason for that is because of this type of model, because of the share piece of commission.
0:26:30 > 0:26:32Here - 1.5%,
0:26:32 > 0:26:37so there's not enough margin in the model.
0:26:38 > 0:26:43I do see there is a potential for it if you start to self-regulate,
0:26:43 > 0:26:47but I think it's about paying people proper money
0:26:47 > 0:26:52because you're not £20,000-a-year salespeople, with respect.
0:26:52 > 0:26:55I'm going to say I'm out.
0:26:57 > 0:27:00Two more Dragons find fault with the duo's plans.
0:27:00 > 0:27:04Now only Theo Paphitis can rescue their dreams of investment.
0:27:07 > 0:27:10Richard, what's your history?
0:27:10 > 0:27:16I was involved in multi-level marketing, built a business, then I came across the realtor method
0:27:16 > 0:27:21and got involved in franchising that through an American... They're the world's largest realtors.
0:27:21 > 0:27:25- Now we're getting there. What happened?- It went belly-up.
0:27:25 > 0:27:28And the model there was...?
0:27:28 > 0:27:31The realtor method.
0:27:33 > 0:27:35OK.
0:27:35 > 0:27:39If it failed so miserably last time...
0:27:40 > 0:27:43..why do you think I'm going to give you 50,000 quid?
0:27:43 > 0:27:47It's not the business model that failed. It's people.
0:27:47 > 0:27:52Businesses don't fail. Airplanes don't crash. Pilots crash airplanes.
0:27:52 > 0:27:54- The people fail.- Is that true?- Yes.
0:27:54 > 0:28:01If a plane develops severe engine problems, it's the pilot's fault?
0:28:01 > 0:28:04That takes care of 1% of the airplane accidents.
0:28:04 > 0:28:091% of the time, maybe a business model fails because of technology shifts
0:28:09 > 0:28:13or the market goes in a completely different direction,
0:28:13 > 0:28:16but most of the time, it's the people who fail.
0:28:16 > 0:28:20This, gentlemen, is already shown to have failed.
0:28:20 > 0:28:23You're following fool's gold.
0:28:23 > 0:28:26It won't work.
0:28:26 > 0:28:28And for those reasons...
0:28:30 > 0:28:33..this fool will not be investing,
0:28:33 > 0:28:35so I'm out.
0:28:38 > 0:28:43A disappointing end for the duo. They stayed remarkably composed,
0:28:43 > 0:28:48but ultimately failed to convince the Dragons there was a future for their business.
0:28:53 > 0:28:58Innovations in the food and drink marketplace are a staple part of the Den diet.
0:28:58 > 0:29:02Mark Shaw from Glasgow hoped the Dragons would fund his crusade
0:29:02 > 0:29:06to turn Scotland's national dish into a fast food snack.
0:29:06 > 0:29:10All he needed was £50,000.
0:29:10 > 0:29:14The idea came to me when I was walking through a shopping centre.
0:29:14 > 0:29:20A friend said, "I'm going to go and get a hot dog," and I said, "I'm going to invent the haggis dog."
0:29:20 > 0:29:24Four Dragons tucked straight in to the delicacy on offer,
0:29:24 > 0:29:27but one erred more on the side of caution.
0:29:27 > 0:29:32- Give me the specific ingredients of that.- Lamb's liver and lungs.
0:29:32 > 0:29:36- So it's a lamb's liver, lamb's lungs?- Yeah. Mixed with spices.
0:29:36 > 0:29:39What? To hide the taste or...?
0:29:39 > 0:29:42Don't start insulting the Scottish dish!
0:29:42 > 0:29:48Having tasted his fare, Theo Paphitis soon set about testing Mark's business resolve.
0:29:49 > 0:29:52£50,000 for 10%.
0:29:52 > 0:29:58- Yeah.- Valuing your business, pre-investment, at half a million. - Yeah.- What...?
0:29:58 > 0:30:02- Why?- I based my figures on the projected sales.
0:30:02 > 0:30:05OK, so if I had half a million quid,
0:30:05 > 0:30:09could I create your haggis sausage?
0:30:09 > 0:30:14- Yes.- Could I create your haggis sausage for £100,000?- Yes.
0:30:14 > 0:30:18Could I create your haggis sausage for £50,000?
0:30:18 > 0:30:23You could make it for 10p if you phoned the manufacturer and asked.
0:30:23 > 0:30:27So why am I going to give you £50,000 for 10%?
0:30:27 > 0:30:29You've got a point.
0:30:32 > 0:30:37Fellow Scot Duncan Bannatyne called an end to Mark's time.
0:30:37 > 0:30:43One of the things you said was if the supermarkets get it and they sell nine packs a day...
0:30:43 > 0:30:49- Yeah.- "If" is a very big word. I can't see the supermarkets selling nine packs a day.
0:30:49 > 0:30:56Although I'd love to spend more time eating haggis with you, I can't because it's not an investment.
0:30:56 > 0:30:59- For that reason, I'm out.- Thank you.
0:30:59 > 0:31:05- So far tonight, only one business has secured a Dragon investment. - We'll accept your offer.
0:31:05 > 0:31:07THEO CHEERS
0:31:07 > 0:31:11To find out what Ryan and Liam make of their new business partner,
0:31:11 > 0:31:16press the red button at the end of the programme.
0:31:18 > 0:31:24Launching a new product into a crowded market makes for about as risky a venture as they come,
0:31:24 > 0:31:28but the Dragons can be persuaded that such an idea has potential.
0:31:28 > 0:31:32At least, that's what our next entrepreneurs are hoping.
0:31:32 > 0:31:38Husband and wife team Michelle and Steve Ellis need an investment in their unique fashion piece.
0:31:38 > 0:31:41Let's see how they get on.
0:32:01 > 0:32:05- Hello, Dragons. I'm Steve, this is Michelle.- Hello.
0:32:05 > 0:32:10We're here today to pitch for £60,000 for 30% stake in our company.
0:32:12 > 0:32:18Fat Frocks is the only UK retailer specialising in tall, plus-size clothing. It's also home to Wingz.
0:32:21 > 0:32:28Zoe is wearing an everyday outfit without Wingz. Sharise is wearing exactly the same outfit with Wingz.
0:32:28 > 0:32:32There are many reasons that women appreciate arm coverage.
0:32:32 > 0:32:35These can range from my personal reason, lipoedema,
0:32:35 > 0:32:41it could be bingo wings, scarring, tattoos. Wingz, as you see,
0:32:41 > 0:32:45are fitted to the top of a woman's body. They come under the bust
0:32:45 > 0:32:50and follow the bra line around the back. The design was registered
0:32:50 > 0:32:53and they come in four sizes. Steve?
0:32:53 > 0:33:00Feedback from customers has been 100% positive. People are saying, "Why has no one done it before?
0:33:00 > 0:33:06"Thank you for liberating our wardrobe." In the first four months, we've sold over 150 pieces of Wingz.
0:33:06 > 0:33:10That's the end of our pitch. Thank you.
0:33:13 > 0:33:17Michelle and Steve Ellis are looking for a £60,000 investment
0:33:17 > 0:33:22to expand their online clothing brand into the mass market.
0:33:22 > 0:33:26What will Peter Jones make of the husband and wife team?
0:33:30 > 0:33:33- Michelle, Steve, hi. I'm Peter. - Hi.- Hi, Peter.
0:33:33 > 0:33:39- How long have you been doing this? Have you got any success previously? - I was busy being a mum.
0:33:39 > 0:33:46- OK.- Before that, I was a bookmaker, before that I worked in a wine shop, before that I was a holiday rep.
0:33:46 > 0:33:53- OK, but not experience in the clothing marketplace.- No, but I love clothes. I've always...
0:33:53 > 0:33:58- There's an affinity with clothes and me. Fashion is a big part of my life.- Yeah.
0:33:58 > 0:34:03- And it's always been a problem part. - Where do you get the clothing from?
0:34:03 > 0:34:07- From India.- And you design the pieces?- I design all the pieces.
0:34:07 > 0:34:12- How much money have you invested in this so far? - Between the two of us, £8,200.
0:34:12 > 0:34:17The total business to date is £28,400.
0:34:17 > 0:34:21- Where did you get the extra £20,000? - Family and friends.
0:34:21 > 0:34:27- Do they own part of the company? - Yes.- You've been going for four months. What's your revenue?
0:34:27 > 0:34:31- 11,000.- £11,000?- Yeah.
0:34:31 > 0:34:37- Right.- But... bear in mind this is a completely new item of clothing.
0:34:37 > 0:34:43There's no category. We've been selling in eBay in tops and jumpers and, as you can see, it's neither.
0:34:46 > 0:34:51The commitment and passion are evident, but what of the business?
0:34:51 > 0:34:55Retail guru Theo Paphitis knows this market well.
0:34:57 > 0:35:03The Wingz, it's very similar to what Asian women wear underneath their saris.
0:35:03 > 0:35:08Asian women wear a tight-fitting sleeve that covers the bust and the back,
0:35:08 > 0:35:13whereas this allows you to wear any neckline and any backline.
0:35:13 > 0:35:20This one is done as a wedding. Most wedding dresses, the best ones you can get are strapless.
0:35:20 > 0:35:25- You have this manufactured in India. What volume do you do? It must be small runs.- It is.
0:35:25 > 0:35:28The minimum order is 30 pieces.
0:35:28 > 0:35:31OK. Are you working from home?
0:35:31 > 0:35:37- Yes, yeah.- The stock is stored in a converted loft at my father's.
0:35:37 > 0:35:42Not at our house. We have three children, so we're tight for space.
0:35:42 > 0:35:48- Michelle, Steve, hi. I'm Deborah.- Hi, Deborah. - How much do the Wingz sell for?
0:35:48 > 0:35:53- 15.99.- And 14.99.- And 14.99.- And what are they costing you to buy?
0:35:53 > 0:35:56About £2.80.
0:35:56 > 0:36:03I'm just trying to understand why is this better than using a shrug or a shawl or a cardigan?
0:36:03 > 0:36:09The thing is, there's plenty of options to do the thing you're trying to do.
0:36:09 > 0:36:15But these... Sorry. These are comfortable and it enables you to use the things in your wardrobe
0:36:15 > 0:36:19more than you ever could have before. The things that hang unused
0:36:19 > 0:36:24because there's no cardigan to go with it or it's sleeveless...
0:36:24 > 0:36:29- These change the shape of a dress. - The trouble is if you stick sleeves
0:36:29 > 0:36:35- on a dress that was designed not to have sleeves...- You've designed a dress for yourself.
0:36:37 > 0:36:42The budding entrepreneurs are proving adept at handling the Dragons' questions.
0:36:42 > 0:36:45Hilary Devey appears impressed.
0:36:48 > 0:36:51- Can I have a look, please?- Yeah.
0:36:56 > 0:37:02- We did have... The patent... - Can I just have a look how it's attached to your dress?- It's not.
0:37:02 > 0:37:05It's just underneath.
0:37:06 > 0:37:13And it's really comfortable. I can move. With a cardie, I can't move my arms forward.
0:37:13 > 0:37:19- So I suppose if you were slimmer, you could wear tops without a bra. - You could if you wanted.
0:37:19 > 0:37:26- You've registered this? - The band that goes under the bust and carries sleeves is registered.
0:37:27 > 0:37:34Steven, Michelle, are you saying you've got a design register or a patent? What have you got?
0:37:34 > 0:37:41We saw a patent attorney and he advised, because it's unique, to get a good element of protection.
0:37:41 > 0:37:47- I did the applications myself... - So you think you've got an absolute patent
0:37:47 > 0:37:53- to stop anyone else making anything similar?- Yes.- There's no guarantee. We can apply for them...
0:37:53 > 0:38:00- You can't possibly have anything that prevents anyone else selling the same thing.- Why?- Yeah, why?
0:38:00 > 0:38:05Loads of people will challenge your patent, people who make clothes,
0:38:05 > 0:38:09constantly will challenge you. It's a piece of cloth.
0:38:09 > 0:38:13You can't possibly have total protection for this.
0:38:16 > 0:38:22It's Michelle and Steve's first knockback, but all five Dragons are still in.
0:38:22 > 0:38:26Deborah Meaden looks to be the first to make up her mind.
0:38:31 > 0:38:37Be very careful about your patent. What people do with patents is take the first step.
0:38:37 > 0:38:43They don't spend any money and then they have to start paying their fees and then they need advice.
0:38:43 > 0:38:47"I've already spent £5,000. I might as well finish the process."
0:38:47 > 0:38:55And I've watched people rack up £40,000, £50,000-worth of fees on patents and not end up with one.
0:38:56 > 0:39:00And...I'm just not convinced.
0:39:01 > 0:39:06Particularly at about £14, £15. These are not throwaway pieces of kit.
0:39:06 > 0:39:11I just think there's other ways of doing it. Really sorry, guys.
0:39:11 > 0:39:13I won't be investing. I'm out.
0:39:16 > 0:39:20A lesson in intellectual property from the experienced investor.
0:39:20 > 0:39:27The duo lose a first Dragon. And Theo Paphitis is now ready to show his hand.
0:39:30 > 0:39:34When people ask me, "If you had limited cash
0:39:34 > 0:39:38"and had to start a business, what would you do?"
0:39:38 > 0:39:43the first thing I always say is I'd do e-commerce.
0:39:43 > 0:39:49That's how I'd grow my business. And you have adopted that same model.
0:39:49 > 0:39:52So for that I congratulate you.
0:39:53 > 0:39:55But then you go against the model
0:39:55 > 0:39:58when you ask me for £60,000.
0:39:58 > 0:40:02- Cos now we're talking about serious investment.- Yeah.
0:40:02 > 0:40:06I do like what you're doing and I would say to you
0:40:06 > 0:40:11carry on doing it. It might take you that little bit longer,
0:40:11 > 0:40:16but you'll still achieve your end goal.
0:40:16 > 0:40:18- I'm out.- Thank you.
0:40:18 > 0:40:22Michelle, Steve, I do like the product.
0:40:22 > 0:40:26I can see that there might be a market for it.
0:40:26 > 0:40:30Very often going out with a product, getting the brand out there,
0:40:30 > 0:40:33will have a decent carry for you.
0:40:33 > 0:40:38Being first to market and your brand existence is going to do it.
0:40:38 > 0:40:45People are going to copy it, bring out derivatives of it, if it's successful. They won't if it's not.
0:40:45 > 0:40:50I wish you the best of luck. It's not something I can invest in, so I'll declare myself out.
0:40:50 > 0:40:53Thank you.
0:40:54 > 0:40:58The duo seem to be getting plenty of advice,
0:40:58 > 0:41:00but as yet no cash.
0:41:00 > 0:41:05Will Duncan Bannatyne rescue their hopes of investment?
0:41:06 > 0:41:08Em...
0:41:08 > 0:41:14The best advice I can give you is to knock on the doors of some shops, keep selling it online,
0:41:14 > 0:41:20but it's not a business where you want an investor to put £60,000 in, who then wants his money back.
0:41:20 > 0:41:24You will not make enough to pay that money back.
0:41:24 > 0:41:27- I'm out, sorry.- Thank you.
0:41:32 > 0:41:34Well, actually, I love it.
0:41:37 > 0:41:42But I personally don't think you need an investor.
0:41:42 > 0:41:46For £60,000, I'd rather be the majority shareholder
0:41:46 > 0:41:50which isn't then fair to the shareholders you've already got.
0:41:50 > 0:41:54- But I love your product. - Thank you.
0:41:54 > 0:42:01And I think you've got a niche market, but that's exactly what it is - a niche market.
0:42:01 > 0:42:04I really wish you good luck.
0:42:04 > 0:42:07- Thank you.- Cheers.- I'm out.
0:42:08 > 0:42:14Michelle and Steve managed to tame the Dragons, but not to extract the investment they needed.
0:42:14 > 0:42:16They leave with nothing.
0:42:25 > 0:42:30Other entrepreneurs who tried and failed in the Den included inventor Jim Jamieson from Salford.
0:42:30 > 0:42:36He wanted £80,000 to bring to market his new supporting legs for lorry trailers.
0:42:36 > 0:42:38That will lock.
0:42:38 > 0:42:41There go the legs.
0:42:41 > 0:42:43The pins lock.
0:42:43 > 0:42:49Traditional devices use hand-wound handles to raise and lower it.
0:42:49 > 0:42:52This is pneumatically operated. Safer, better and faster.
0:42:52 > 0:42:59Truck technology is not exactly the specialist subject to four Dragons, so clarity was vital.
0:43:00 > 0:43:06So there was actually nobody in the world who has got a telescopic landing leg?
0:43:06 > 0:43:08No.
0:43:08 > 0:43:13- But there are trailer landing legs. - Yes.- But not telescopic. - Yeah, there are.
0:43:13 > 0:43:16OK, Jim, really concentrate.
0:43:16 > 0:43:19- There are telescopic landing legs? - Yeah.
0:43:19 > 0:43:23- Did you just say there weren't? - They are screw-driven inside.
0:43:23 > 0:43:26- You're just too confusing.- I know.
0:43:27 > 0:43:31Beguiled perhaps, but still bewildered,
0:43:31 > 0:43:35the industry expert eventually lent some clarity to proceedings.
0:43:35 > 0:43:39The haulage sector work on very, very low margins.
0:43:39 > 0:43:44If you had come in here and asked for £25,000,
0:43:44 > 0:43:46I'd have snapped your hand off.
0:43:46 > 0:43:51But for £80,000, as much as I love it,
0:43:51 > 0:43:53- I'm out.- OK.
0:43:55 > 0:44:00Marion Mainstone from London came into the Den needing £200,000
0:44:00 > 0:44:04to start mass-producing her novel foldaway furniture.
0:44:04 > 0:44:08I've formed Flip It Sales to fully exploit two patents.
0:44:08 > 0:44:12So far, I've designed articles of furniture.
0:44:12 > 0:44:18They open and close with one simple movement. The Flip It chair has received three innovation awards.
0:44:19 > 0:44:26But the simplicity of the product was overshadowed by the complexity of the business proposition.
0:44:26 > 0:44:30- I'm proposing a completely new company.- Why a new company?
0:44:30 > 0:44:36Because the company that funded the design and development of the chair
0:44:36 > 0:44:40wants to lease out its IPR and doesn't want to operate any more.
0:44:40 > 0:44:45But if I was to invest in a business, every one of those chairs that I sold
0:44:45 > 0:44:51- I would have to pay royalty to the first company?- Yeah.
0:44:51 > 0:44:55I really like it. I like the look as well as the mechanism of it.
0:44:55 > 0:45:00The issue for me is that you've come in here asking for £200,000
0:45:00 > 0:45:04in a company that doesn't even own the patent.
0:45:04 > 0:45:06- I'm out.- Thank you.
0:45:11 > 0:45:17Dublin-born industrial designer Aidan Quinn and his business partner Gemma Rowe from Stockport are next
0:45:17 > 0:45:23with their eye-catching product, but not only does it have to tick all the right boxes in the design,
0:45:23 > 0:45:26it also has to make a good business.
0:45:41 > 0:45:47Hello, Dragons. My name is Aidan Quinn and this is my business partner, Gemma Rowe.
0:45:47 > 0:45:52I'm the managing director of EcoHab Homes and O-Pod Buildings.
0:45:52 > 0:45:59We're here looking for an investment of £75,000 for a 15% share of both businesses.
0:46:01 > 0:46:06EcoHab builds super energy-efficient dome-shaped eco homes.
0:46:06 > 0:46:14The idea is to minimise the carbon footprint of the home and to reduce energy consumption by at least 90%.
0:46:14 > 0:46:19Here we have an example of three pods we're currently building.
0:46:19 > 0:46:22This one is ideal for a small family.
0:46:22 > 0:46:25The price is approximately £100,000.
0:46:25 > 0:46:31We need a bigger manufacturing facility and we have come across problems with planning delays,
0:46:31 > 0:46:35buildings control and lengthy development costs.
0:46:35 > 0:46:41So approximately a year ago Aidan designed a new product to eliminate all of our problems.
0:46:46 > 0:46:50And O-Pod Buildings was born. This doesn't require planning permission,
0:46:50 > 0:46:54it's got a much greater gross profit margin and it sells.
0:46:54 > 0:46:58In the first 12 months, we've turned over £160,000
0:46:58 > 0:47:05- with a tiny marketing budget. - As George Osborne said, "Let's get Britain back to manufacturing."
0:47:05 > 0:47:08- We welcome your questions. - Can I go inside?- Absolutely.
0:47:08 > 0:47:12- DUNCAN: - Can you fit five Dragons in?- Yeah!
0:47:14 > 0:47:21A large-sized product from Aidan and Gemma, but will the Dragons see it as a large-scale opportunity?
0:47:21 > 0:47:23Offering 15% equity,
0:47:23 > 0:47:29they're looking for a £75,000 investment in their pre-fabricated garden structures
0:47:29 > 0:47:33and innovative designs for environmentally-friendly homes.
0:47:33 > 0:47:39Theo Paphitis is first to question the Stockport-based business partners.
0:47:41 > 0:47:47OK, that was interesting, but let's get down to some serious business.
0:47:47 > 0:47:50- What's the trading history of Eco Homes?- EcoHab.
0:47:50 > 0:47:57We've turned over approximately £140,000 with the EcoHabs. All of that has gone back in...
0:47:57 > 0:48:02- Over how many years?- Four years. - Have you made any money?
0:48:02 > 0:48:07- No, we've lost money.- How much? - I've invested about £200,000.
0:48:07 > 0:48:12- But it's nearly developed and completed at this stage. - OK. That's part of it.
0:48:12 > 0:48:17- But also there's a second leg of the business.- The O-Pod is separate.
0:48:17 > 0:48:20- This is garden rooms, garden offices.- OK.
0:48:20 > 0:48:28- Talk to me about the cost and fabrication of this.- The manufacture of a three-metre is around £3,000.
0:48:28 > 0:48:33- And you sell it for?- We sell that for about £7,000.- Retail price?
0:48:33 > 0:48:37- That's right.- OK. Explain to me, just to make sure I've got it right,
0:48:37 > 0:48:41why this doesn't need planning or building control?
0:48:41 > 0:48:47There's an allowance of 30 square metres in your garden, no more than 4 metres high. This falls within it.
0:48:50 > 0:48:54A confident start from the well-informed duo,
0:48:54 > 0:48:58but Peter Jones is not looking impressed.
0:48:58 > 0:49:05If I was going to look at a home, I look at that and I don't see a home, I see a bee hive.
0:49:05 > 0:49:10There is a huge attraction to a structure of this shape.
0:49:10 > 0:49:12- Really?- Yes, indeed.
0:49:14 > 0:49:17I-I'm shocked.
0:49:17 > 0:49:21We're not going to focus on this for the time being.
0:49:21 > 0:49:23That's a consideration for later.
0:49:23 > 0:49:30We go to that and I see something like an old storage water tank with a hole in it for a window.
0:49:30 > 0:49:37- What do you see?- It comes back to the point that some people find that incredibly attractive. Not everybody.
0:49:37 > 0:49:43- We only need a small percentage of people.- I get that, but that is weird to me.
0:49:43 > 0:49:48It's a fact. We've sold 20 and we haven't really got going.
0:49:51 > 0:49:57I'm going to be brutally honest. I don't want to invest in the world's most expensive bee hive.
0:49:57 > 0:50:02So that's that. And that is just a wooden-clad...
0:50:02 > 0:50:07tank, that I think would be the last thing I would want.
0:50:07 > 0:50:14- So you can tell that it's clearly not an investment for me.- OK. - So I'm out.- I appreciate that.
0:50:14 > 0:50:16Thank you.
0:50:18 > 0:50:25It's an early out and the duo's initial confidence takes an immediate hit.
0:50:25 > 0:50:29Will Deborah Meaden be more forgiving?
0:50:29 > 0:50:32Gemma, Aidan, hi. I'm Deborah.
0:50:32 > 0:50:37I think you're really presenting as a business opportunity, I think,
0:50:37 > 0:50:41the building behind us. This is a little bit of history.
0:50:41 > 0:50:48I think the only thing going for it is price. There are some very lovely pods that I'm sure you've seen
0:50:48 > 0:50:53with great big windows on the front so you have lovely vistas out.
0:50:53 > 0:50:59- So how competitive are you? - We're probably about 25% less than our competitors,
0:50:59 > 0:51:04- but nobody makes a round one. - Well, they do, just so you know. - Oh, right.- Yeah.
0:51:04 > 0:51:12- In fact, I saw one recently... - Was it spherical, the one you're talking about?- Yes.- All right, OK.
0:51:12 > 0:51:15I'm aware of that one. It's £16,000.
0:51:15 > 0:51:21It is attractive, but it doesn't offer the same space or functionality as this one.
0:51:21 > 0:51:25- So what's different?- You get a full footprint of three metres with this.
0:51:25 > 0:51:32And you can put your own shelves in. If you get the bespoke circular one, it's very difficult to customise it.
0:51:32 > 0:51:34Well...
0:51:34 > 0:51:36I think you'll sell some,
0:51:36 > 0:51:42but I don't think it's going to be a huge business. I think it will be terribly specialist.
0:51:42 > 0:51:45So I'm afraid I won't be investing.
0:51:46 > 0:51:48I'm out.
0:51:49 > 0:51:55A second blow and Aidan and Gemma's options are fast running out.
0:51:55 > 0:52:00Will Hilary Devey offer the duo's business more scrutiny?
0:52:02 > 0:52:05I'm all for green, totally, utterly. 100%.
0:52:05 > 0:52:10I've got a beautiful fishing lodge in my grounds of my home
0:52:10 > 0:52:16and it's been insulated to the nth degree, it's got solar panels on the roof, et cetera, et cetera.
0:52:16 > 0:52:24And it's lovely looking with the balconies that you can sit on at night and look over the lakes.
0:52:24 > 0:52:28In fact, I often think I'd rather live in that.
0:52:28 > 0:52:32And the cost of that, which is three or four times the size of that,
0:52:32 > 0:52:36was not much more than what you're selling that for.
0:52:36 > 0:52:40- So I'm sorry, I'm out. - No problem.
0:52:40 > 0:52:42Aidan, Gemma, are you related?
0:52:42 > 0:52:46- No.- No.- How did you meet? - I'm an interior designer.
0:52:46 > 0:52:51I saw the EcoHab and fell in love with it and wanted to work with him
0:52:51 > 0:52:55and then a year ago we started promoting the O-Pod.
0:52:55 > 0:53:02- You have an office somewhere?- Yes. - We do. It's actually a four-metre pod attached to a three-metre one.
0:53:02 > 0:53:06Right. And you sit in your pod trying to sell eco-pods.
0:53:06 > 0:53:11Not trying to. Actually selling them and the numbers are increasing.
0:53:11 > 0:53:15- So if you don't get investment, what'll happen?- We'll carry on.
0:53:15 > 0:53:20We're on target to double our turnover this year.
0:53:22 > 0:53:26I wish you both the best of luck, but I'm not convinced, so I'm out.
0:53:31 > 0:53:35Two more Dragons out and the duo's investment dreams
0:53:35 > 0:53:38now lie entirely with Theo Paphitis,
0:53:38 > 0:53:43but has he spotted something his rivals have not?
0:53:45 > 0:53:47Aidan, Gemma,
0:53:47 > 0:53:52- your last year did £160,000?- Yeah. - And this will be a record year.
0:53:52 > 0:53:56- What's the numbers? - 300,000 is our estimated turnover.
0:53:56 > 0:54:02- So we'll have a gross profit of 70,000, net profit of approximately 40,000.- And that...- Oh, sorry.
0:54:02 > 0:54:08- No, sorry, gross profit of 150, net profit of 70. That was last year, I'm sorry.- 150 gross?
0:54:08 > 0:54:13- And net of...?- Net of 70. - Net of 70.- Yes.
0:54:13 > 0:54:19- What's your order book like? - At the moment we have six orders, but 12 people coming on stream
0:54:19 > 0:54:24and we're expecting this to pick up very quickly.
0:54:25 > 0:54:26Right.
0:54:29 > 0:54:34- I actually like it. I like the look of it.- Thank you.
0:54:34 > 0:54:36But it's early doors.
0:54:41 > 0:54:44I'm going to make you an offer,
0:54:44 > 0:54:48but I'm not going to make you an offer on the terms you asked for.
0:54:51 > 0:54:54For the full 75,000,
0:54:56 > 0:54:58but I'm going to be wanting
0:54:59 > 0:55:04forty-five per cent of the business.
0:55:11 > 0:55:17We really believe the risk element is quite low. The potential of the product is...
0:55:17 > 0:55:20Potential... Potential is...
0:55:21 > 0:55:25- just a guess. I've got to assess what I think the potential is.- Mm.
0:55:31 > 0:55:34Can you meet us halfway at 30%?
0:55:42 > 0:55:46The risk/reward ratio is not there at 30%.
0:55:49 > 0:55:54We do know the product makes money. It's got a great profit margin and it does sell.
0:55:54 > 0:55:57This is what we are focusing on now
0:55:57 > 0:56:02- and it would be fantastic to have you onboard, but this is...- OK.
0:56:02 > 0:56:05I'll make you one final offer.
0:56:08 > 0:56:13On the basis that your accounts will show 160 turnover
0:56:13 > 0:56:15and 40,000 profit
0:56:15 > 0:56:19I will come down to 40%.
0:56:20 > 0:56:25What if we meet all our targets within 12 months
0:56:25 > 0:56:30and we give you 50% of your investment back
0:56:30 > 0:56:34and you reduce your shareholding to 30%?
0:56:39 > 0:56:43- I'll take 40%, day one.- Mm-hm.
0:56:45 > 0:56:49- I give you £37,500 as equity. - Mm-hm.
0:56:49 > 0:56:53And £37,500 as an interest-free loan.
0:56:54 > 0:56:59- Then if you hit your targets and you repaid the interest-free loan... - Yeah.
0:56:59 > 0:57:06- ..I'd have left £37,500 as equity and that then leaves me 30%. - That's right.
0:57:06 > 0:57:09- Is that the deal?- That's the deal.
0:57:11 > 0:57:14You've got a deal.
0:57:14 > 0:57:18- Well done.- Thank you. - Aidan and Gemma have done it.
0:57:18 > 0:57:25It took some quick-witted negotiation, but they leave having shaken hands on a deal
0:57:25 > 0:57:29with a well-connected multi-millionaire.
0:57:29 > 0:57:35It's Theo that we wanted, so we felt we had the right person, the right investor.
0:57:35 > 0:57:39It'll come down to 30%. He's happy with the arrangement.
0:57:39 > 0:57:43So it's up to us to produce the results and we know we will.
0:57:52 > 0:57:56So as we look back on the day, what Aidan and Gemma have proved is
0:57:56 > 0:58:00that it's not important for everybody to like your product.
0:58:00 > 0:58:04What matters is that enough people like it for it to succeed.
0:58:04 > 0:58:10And you don't need all the Dragons. One investor with all the money is quite enough.
0:58:10 > 0:58:16If you'd like to know what it's like pitching to the Dragons, press the red button now
0:58:16 > 0:58:18to hear from Aidan and Gemma.
0:58:18 > 0:58:24If you think your business has what it takes to secure investment, you can apply online -
0:58:24 > 0:58:28bbc.co.uk/dragonsden Goodbye.
0:58:28 > 0:58:31Next time on Dragons' Den:
0:58:31 > 0:58:35You've got to make some money at some point.
0:58:35 > 0:58:40- It's not going to happen in my lifetime.- No, but it could in mine.
0:58:41 > 0:58:46- Did you try?- I didn't, no. Oh, don't look disappointed, Theo.
0:58:46 > 0:58:50I love it, but the valuation is crazy.
0:58:50 > 0:58:55Without listening to the others, I'd like to make you an offer.
0:59:06 > 0:59:10Subtitles by Subtext for Red Bee Media Ltd - 2011
0:59:11 > 0:59:13Email subtitling@bbc.co.uk