Episode 8 Dragons' Den

These are the Dragons, five of Britain's wealthiest and most enterprising business leaders.

Over the coming weeks, they'll make or break the dreams of dozens of budding entrepreneurs.

If I put £50,000 into this, there's a very, very high percentage chance that I'll lose it.

The great news is that the world isn't short of musical talent, so I'm back to "why you"?

-I won't invest in the world's most expensive beehive.

-I won't make you an offer on the terms you ask for.

Frankly, the beast doesn't change.

When that beast is hungry, it wants feeding.

The multi-millionaire investors have each built up their fortunes from scratch.

Hotel and health club owner Duncan Bannatyne,

leisure industry expert Deborah Meaden,

retail magnate Theo Paphitis,

telecoms giant Peter Jones...

..and Hilary Devey who made her millions in the haulage industry.

The Dragons have the credentials, the contacts, the commitment and the cash ready to invest,

but only in the right business. Will any of these hopeful entrepreneurs walk away with their money?

Welcome to the Dragons' Den.

We have a succession of entrepreneurs keen to do business

with our five multi-millionaire investors.

There is just one challenge.

They have to convince the Dragons their ideas will make money.

Only the best will succeed. The rest will walk away empty-handed.

It is the Dragons' own money that is being invested in the Den,

so don't be surprised if they ask searching questions.

Will our first entrepreneurs convince them to invest?

Hi, Dragons. I'm Ryan Ashmore and this is my business partner Liam Webb.

Together we run a record label called RKA Records

and we're looking for an investment of £50,000 for a 15% share in our company.

The company was formed in October 2010. Since then, a lot has happened.

We've signed two great artists who are working on their debut albums.

Chris and Marq live in Germany and we try to travel there at least once a month.

It's also worth noting that all of our artists... Sorry, um...

(Scarlette.)

We're in the process of signing an artist called Scarlette.

Scarlette has received great reviews from leading promotion companies, as well as multi-platinum producers.

Here you can see some pictures of our artists.

Each artist has a very marketable style and look

and this, combined with their musical ability, makes us believe that success is inevitable.

We have a passion for music and business and our skills match those of business people twice our age.

Thank you for listening to our pitch. We'll play a medley of tracks for you to listen to.

MUSIC: "Slowdown" - Scarlette

# Ain't gonna stop cos no-one's gonna live for ever... #

# What was the reason? Why are you leaving?

# Victim to the sword... #

MUSIC: "L.O.U.D" - Chris Parham

# Metal chains, insane, silver-blue strobe light, do it just the way you like... #

Please feel free to ask any questions.

Aspiring music moguls Ryan Ashmore and Liam Webb from Leicestershire

are hoping their new record label will catch the Dragons' attention and a £50,000 cash injection.

In return, 15% of their business is on offer.

Hilary Devey looks intrigued.

-How old are you?

-We're both 18.

-Well done.

-Thank you.

-Well done.

Tell me how you got into this business.

Back in school, a friend was in a band.

I've always wanted to work in music. He said, "Why don't you manage us?"

I was quite successful managing them. I got some gigs at some pretty high profile venues.

Last summer, I was holidaying in Spain and I met Marq.

And as soon as I heard him, I thought, "I need to start this again."

We worked with him for a week or two in his home studio and we met Chris as well.

-We loved both of them. We wanted to sign both of them.

-We drew up the contracts.

-Did you get lawyers to draw them contracts up?

-Lawyers checked over them in Germany.

We managed to work out a very good percentage deal on our part.

We receive 80% and they get 20.

We asked them what they feel would be fair

and they were extremely happy with 20%.

-I'm surprised.

-We were.

It's rare for entrepreneurs to impress a Dragon with their negotiating prowess,

but that's what Ryan and Liam have just achieved.

Now Duncan Bannatyne wants to drill down into the financials.

OK, gentlemen...

Have you produced any records? Have you had any income yet?

We've released two singles. We haven't got the sales data for the second single yet.

The first single was a test cos we were new to the business.

We got it to a distributor, we got it on iTunes.

Have you started any other businesses?

I used to have a mobile disco company.

-Yeah.

-I started that when I was 12.

How much did you make?

I'd say around 25,000 to 30,000.

-What did you do with that?

-It's been spent.

-Right, OK.

Where is the company based?

-At my home.

-So it's in your bedroom?

-Basically, yeah.

-No expenses really?

-Our overheads are about £2.80 a month on hosting.

-Hosting for the website.

A level-headed manner and a thrifty approach to business -

the teenage entrepreneurs are charming the multi-millionaires.

But what will Theo Paphitis make of the proposition on offer?

Now, you're entering into a market that is incredibly competitive, cut-throat.

You now need to give me a proper reason why I would invest in you.

If you can be successful in music, there's a lot of money to be made.

I believe with a record label you've got multiple chances cos you've got more than one artist.

If one artist, God forbid, fails,

you've got other artists who can pick it up and support it.

And Ryan, have you got a reason?

I'd say the interest that we've received.

We contacted a very famous multi-platinum producer in LA.

He's worked with Timbaland, Justin Timberlake, The Jonas Brothers, a lot of kids' pop really.

Guys, I think I can speak from a little bit of experience,

being involved in this with Hamfatter.

It was tough. I'd be intrigued to know... What would you do differently?

Hamfatter, I'd say, is more of an indie band.

We've got Chris, Marq and Scarlette.

We feel the music is a lot like chart music.

And right now, pop, R&B and dance music is where it's at.

It's what's commercial.

And the guy that you've mentioned, what do you think he's going to do?

I'm guessing he will charge a fee for his services.

He won't take a percentage because, at the end of the day,

he works and he needs to charge people or he risks, you know...

I'll tell you exactly what he'll do. He'll charge you a minimum retaining fee to take the work on of 20,000.

He's then going to start to charge you studio time for hiring out his studio to make these tracks.

You'll then fly your artists out there and you'll incur expenses. It'll cost you about 45,000-50,000.

This is one of the hardest industries to crack

and the number of people that succeed in this marketplace

are literally counted on both your hands.

You're really going to struggle in this. I'm going to wish you guys the best of luck, but I'm out.

-Thank you.

-Thanks a lot.

A first blow as Ryan and Liam's business naivety is exposed.

Deborah Meaden is next to interrogate the duo.

Ryan, Liam, hi, I'm Deborah.

Um...

I get quite a bit of music pitched to me

and I always think whether I like it or not isn't the issue.

The issue is - is it right, is it the right market, does it appeal? So why you?

We're extremely dedicated to this. We don't hold down commitments, we're not married, we don't have families.

OK, that's the way you are, but what have you got that's different?

I'd have to say the artists we have.

Liam, the great news is that the world isn't short of musical talent,

so I'm back to "why you"?

We... We're only young. We don't have life experience.

But we are trying exceptionally hard.

Ryan, I'm going to be really tough on you now.

You're struggling to look at us. You're struggling to... And that's what you've got to do.

To get out there and get this music heard, you'll have to knock down doors and not take no for an answer.

-You are really going to have to work at it.

-We're just a bit overawed.

-We are willing to do that.

-You can't be. You cannot be overawed.

-Particularly the environment you're going into.

-Yeah.

The people who have succeeded are the people who just grab hold of it

and say, "I don't care how old I am, I am going to make this happen."

I don't get that from you two guys.

-OK.

-OK.

-So I won't be investing in you. I'm out.

-Thank you.

Thank you. Thanks a lot.

Right...

Lots of young people making it in this market, lots of young people failing in this market.

You might get there. Then again, you might not.

But you're a long way from me investing 50,000 quid.

-For any percentage of the business.

-Yeah.

-So, chaps, I'm out.

-Thank you.

-Thank you.

What really concerns me is that business

-has to be fair and equitable for all parties.

-Yeah.

You've got three artists signed where you're taking 80%.

Don't you think if they was successful, that relationship would turn sour very quickly?

I think if it turned successful,

we would try our very best to keep them with us.

But how are you going to manage that?

-Will you say, "I got the percentage wrong in the first place"?

-Yeah.

It's not good business sense, is it?

It would be a very short-term relationship, I feel.

-Yeah.

-And what worries me is what then follows.

So because of that, I've got to say I'm out.

Three Dragons out in quick succession.

The duo's Den dreams now rest solely with Duncan Bannatyne.

Will he see anything in the youngsters that is worth a £50,000 investment?

I don't know. I'm not sure.

I'm thinking, you know, if I put £50,000 into this,

there's a very, very high percentage chance that I'll lose it.

There is still a huge amount of money to be made in music.

When would you see some revenue?

If we get promotion behind it and the single takes off, everyone loves it,

it can easily make 100K in a couple of weeks.

-So you get 80%?

-Yeah.

-Normally, it's split 50/50.

-If they were happy with it, we were happy with it.

I'm going to make you an offer that's better than the offer you made to the artists. OK?

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

I want 79% of the company.

-Could we just have a chat? Is that all right?

-Yeah, sure.

-We've got to take the opportunity.

-Yeah?

We'd like to accept your offer.

APPLAUSE

Ryan and Liam have done it. It was one of the most surprising about-turns in the Den,

but they leave with the backing of an experienced, multi-millionaire business partner.

Well, Liam, Ryan, what have you just done?

It was a big decision, but if we went out of here with an offer and we didn't accept it, we'd regret it.

If we can get mentored by one of the most successful businessmen in the country...

Once he puts that offer out there, you bite his hand off. We're now in business with Duncan Bannatyne.

-It will be an interesting adventure. Good luck.

-Thank you.

Many entrepreneurs who come into the Den hope that a good demonstration

will give them a better chance of investment.

Yasmin Hussain needed £65,000 to expand her new business

and brought along a couple of young friends to help her out.

My company merchandises tri-namic balls.

It's an in-car accessory, so it can be hung from the rear-view mirror.

It's also a desktop accessory and it's also a real ball for play purposes.

DANCE MUSIC

As you might expect, the Dragons can be pretty hard to impress.

I didn't quite get the dance with the ball.

They try to do identical things, one with a conventional size and one with a tri-namic ball.

-What did you call it?

-A tri-namic.

So, one, hang it in the car, two, put it on your desk and three, use it as a real ball?

There you are. Easy!

Sadly for Yasmin, extracting investment wasn't quite so easy.

I've got about ten of these at home this size.

-But it's not a tri-namic ball, is it?

-No, it's not. It's just...

A ball.

In the end, Hilary Devey delivered the difficult business lesson

to the fledgling entrepreneur.

-How many have you sold to date?

-I've sold 5,500 units.

So my focus now is for 2012 and the Olympics and Euro 2012.

Carry on for the Olympics cos I think you'll make a few bob.

But there's no longevity in the business. For that reason, I'm sorry, I'm out.

Thank you.

-They call me Lightning Jones.

-Good catch.

-Good catch, yeah.

With the housing market having a tough time at the moment,

Worcestershire-based salesman Richard Williams and Canadian real estate expert Gil Ostrander think

they have a concept to give it a real boost. They're next in the Den.

Hello, Dragons. My name is Richard Williams.

This is my colleague, Gil Ostrander.

Gil Ostrander and I have a company called Realtor Network Limited.

We offer 20% equity

in exchange for an investment of £50,000.

Estate agency in the UK today does not work.

There is a solution.

Gil Ostrander has built realtor networks for 30 years in North America

and for 15 years in Europe. Gil?

The solution is simple and yet radical.

The paradigm of salaried employees in small, high street locations

simply must change.

The UK is the last major country in Europe to not adapt the real estate industry

to a straight commission model with an active sales force.

We will establish a multiple listings system

where one realtor office could list a property

and another office could sell the property.

In return for this, they would join our network and pay us a licence fee.

Any questions are welcome.

Confident claims from Richard Williams and his experienced business partner Gil Ostrander.

In a bid to revolutionise the way we buy and sell property,

the duo need a £50,000 investment and are prepared to offer a 20% stake.

But Peter Jones looks confused.

-Richard, Gil, hi, I'm Peter.

-Hello, Peter.

I like the sale board.

-Yeah, cos "realtor" is like our version of an estate agent in the States, isn't it?

-Exactly.

-Yes.

So if you've got all of your realtor agents in your network

and there is a house that all of them are clearly trying to sell,

it's one house, and I'm Peter Jones Estate Agents,

and I have a few spare desks there and a few people from Realtor Network...

If somebody, wherever they are, they phone through to, say, Tom Hughes,

and say, "I've got a buyer for you, Tom..."

So now I've got two of your agents.

That house is sold

and I've charged 1.5% commission.

What does the first agent that found the buyer get?

-Half of the commission.

-So he gets 0.75%?

-Exactly.

-What does Tom Hughes get?

The other half of the commission.

-What about poor Peter Jones?

-What about Peter Jones, the estate agent?

OK, maximum half down to 15%.

So I could get 15% of 1.5%?

No, of the 0.75.

I mean, that's hardly even going to pay for the paper to print the documents.

The enigmatic entrepreneurs seem only to have confounded the Dragons.

Can Theo Paphitis make sense of the proposition?

OK, Richard, Gil, you've not thought this through.

-P Jones owns the office.

-Right.

He's sitting back in his office, waiting to count the money,

and Tom Hughes says, "I made 1,500 quid, so I'm going to give you 15% of that."

-225 quid.

-Yeah.

-You're absolutely correct.

-I'm not finished yet.

-Neither was I, but go ahead.

-Well, I was talking.

-Go ahead. Continue, please.

For his 225 quid, he's run his website...

-Measured the house.

-Measured the house.

-Took photographs.

-Took photographs. 225 quid?!

My turn?

Yes, 225 quid.

My turn?

You forgot to mention that Tom Hughes paid him £800 at the beginning of the month

to cover his fair share of that rent and that sign and that electricity.

The other thing is that you could have 30 guys doing this for you.

And 30 guys times 225 quid, if they did it every day,

starts to be an interesting business model.

An uncomfortable exchange perhaps, but finally, some light is shed on the business model on offer.

Duncan Bannatyne is next to interrogate the duo.

Right, the market is low at the moment. The market is slow with houses.

-Mm-hm.

-So it doesn't matter how you're selling.

It doesn't matter how good you are.

If nobody's buying, you won't sell.

I agree, except for the fact that 650,000 people bought last year.

-Where?

-In the UK.

-How many bought in America?

-I don't know. Why do we want to talk about that?

Because you said this is how they sell in America

and we're going to bring it to the UK and use this method in the UK.

I don't understand your point.

Do you think the American real estate market has collapsed in the last two years?

-I don't really care. That's not my question.

-Nor do I. That's MY point.

Right, you could be reasonable and answer a reasonable question.

That's entirely up to you. But I tell you, whatever you do, I'm out.

An infuriated Duncan Bannatyne refuses to do business with Gil and Richard

and walks away from the deal.

Will Hilary Devey be able to bring some calm to proceedings?

Years and years and years and years, too many years to mention,

I used to recruit and run direct sales forces.

Today, it is, I would say, nigh-on impossible

to recruit direct sales people to work on a commission-only basis

in the UK.

I've been hearing those words for 30 years in every country I've worked in.

All I can tell you is 25 years ago, I did it, and today, I'd have a problem

in lending my name because ultimately, I know the scams they got up to to earn that commission.

You are describing the real estate industry I joined 40 years ago. It was an industry of pirates.

What we did by introducing some of the changes that we're talking about here,

-codes of ethics, more effective training, showing them how to make their money correctly...

-OK.

-By doing that, we changed that industry into a profession.

-OK.

-I was part of that.

-Gil...

-I'm a refugee of that. Sorry.

-God gave you one of these and two of these. Use them wisely.

-I'm trying. Go ahead.

-Do you know what?

The beast doesn't change. When that beast is hungry, it wants feeding.

And by God, somehow or other, they'll find a scam to get fed.

I'm out.

Discord over the business model and discontent with the entrepreneur's manner

results in the loss of a second Dragon.

Now will Deborah Meaden agree with her rival investor's concerns?

OK, um, this model works in the States.

I think the problem is the mindset is different between the States and here

and without the protections of licensed agents,

I think there will be a problem convincing people in the UK this is a model they want to shift to.

If I'm wrong about that, you're talking to the wrong person in me.

You should be talking to some of the big operators,

but I'm not convinced that they will adopt it because the way we sell properties is deeply embedded.

-So for those reasons, I'm out.

-Thank you.

Richard, Gil, in America it is very typical to charge for the sale of your house

between 4 and 8%.

And the reason for that is because of this type of model, because of the share piece of commission.

Here - 1.5%,

so there's not enough margin in the model.

I do see there is a potential for it if you start to self-regulate,

but I think it's about paying people proper money

because you're not £20,000-a-year salespeople, with respect.

I'm going to say I'm out.

Two more Dragons find fault with the duo's plans.

Now only Theo Paphitis can rescue their dreams of investment.

Richard, what's your history?

I was involved in multi-level marketing, built a business, then I came across the realtor method

and got involved in franchising that through an American... They're the world's largest realtors.

-Now we're getting there. What happened?

-It went belly-up.

And the model there was...?

The realtor method.

OK.

If it failed so miserably last time...

..why do you think I'm going to give you 50,000 quid?

It's not the business model that failed. It's people.

Businesses don't fail. Airplanes don't crash. Pilots crash airplanes.

-The people fail.

-Is that true?

-Yes.

If a plane develops severe engine problems, it's the pilot's fault?

That takes care of 1% of the airplane accidents.

1% of the time, maybe a business model fails because of technology shifts

or the market goes in a completely different direction,

but most of the time, it's the people who fail.

This, gentlemen, is already shown to have failed.

You're following fool's gold.

It won't work.

And for those reasons...

..this fool will not be investing,

so I'm out.

A disappointing end for the duo. They stayed remarkably composed,

but ultimately failed to convince the Dragons there was a future for their business.

Innovations in the food and drink marketplace are a staple part of the Den diet.

Mark Shaw from Glasgow hoped the Dragons would fund his crusade

to turn Scotland's national dish into a fast food snack.

All he needed was £50,000.

The idea came to me when I was walking through a shopping centre.

A friend said, "I'm going to go and get a hot dog," and I said, "I'm going to invent the haggis dog."

Four Dragons tucked straight in to the delicacy on offer,

but one erred more on the side of caution.

-Give me the specific ingredients of that.

-Lamb's liver and lungs.

-So it's a lamb's liver, lamb's lungs?

-Yeah. Mixed with spices.

What? To hide the taste or...?

Don't start insulting the Scottish dish!

Having tasted his fare, Theo Paphitis soon set about testing Mark's business resolve.

£50,000 for 10%.

-Yeah.

-Valuing your business, pre-investment, at half a million.

-Yeah.

-What...?

-Why?

-I based my figures on the projected sales.

OK, so if I had half a million quid,

could I create your haggis sausage?

-Yes.

-Could I create your haggis sausage for £100,000?

-Yes.

Could I create your haggis sausage for £50,000?

You could make it for 10p if you phoned the manufacturer and asked.

So why am I going to give you £50,000 for 10%?

You've got a point.

Fellow Scot Duncan Bannatyne called an end to Mark's time.

One of the things you said was if the supermarkets get it and they sell nine packs a day...

-Yeah.

-"If" is a very big word. I can't see the supermarkets selling nine packs a day.

Although I'd love to spend more time eating haggis with you, I can't because it's not an investment.

-For that reason, I'm out.

-Thank you.

-So far tonight, only one business has secured a Dragon investment.

-We'll accept your offer.

THEO CHEERS

To find out what Ryan and Liam make of their new business partner,

press the red button at the end of the programme.

Launching a new product into a crowded market makes for about as risky a venture as they come,

but the Dragons can be persuaded that such an idea has potential.

At least, that's what our next entrepreneurs are hoping.

Husband and wife team Michelle and Steve Ellis need an investment in their unique fashion piece.

Let's see how they get on.

-Hello, Dragons. I'm Steve, this is Michelle.

-Hello.

We're here today to pitch for £60,000 for 30% stake in our company.

Fat Frocks is the only UK retailer specialising in tall, plus-size clothing. It's also home to Wingz.

Zoe is wearing an everyday outfit without Wingz. Sharise is wearing exactly the same outfit with Wingz.

There are many reasons that women appreciate arm coverage.

These can range from my personal reason, lipoedema,

it could be bingo wings, scarring, tattoos. Wingz, as you see,

are fitted to the top of a woman's body. They come under the bust

and follow the bra line around the back. The design was registered

and they come in four sizes. Steve?

Feedback from customers has been 100% positive. People are saying, "Why has no one done it before?

"Thank you for liberating our wardrobe." In the first four months, we've sold over 150 pieces of Wingz.

That's the end of our pitch. Thank you.

Michelle and Steve Ellis are looking for a £60,000 investment

to expand their online clothing brand into the mass market.

What will Peter Jones make of the husband and wife team?

-Michelle, Steve, hi. I'm Peter.

-Hi.

-Hi, Peter.

-How long have you been doing this? Have you got any success previously?

-I was busy being a mum.

-OK.

-Before that, I was a bookmaker, before that I worked in a wine shop, before that I was a holiday rep.

-OK, but not experience in the clothing marketplace.

-No, but I love clothes. I've always...

-There's an affinity with clothes and me. Fashion is a big part of my life.

-Yeah.

-And it's always been a problem part.

-Where do you get the clothing from?

-From India.

-And you design the pieces?

-I design all the pieces.

-How much money have you invested in this so far?

-Between the two of us, £8,200.

The total business to date is £28,400.

-Where did you get the extra £20,000?

-Family and friends.

-Do they own part of the company?

-Yes.

-You've been going for four months. What's your revenue?

-11,000.

-£11,000?

-Yeah.

-Right.

-But... bear in mind this is a completely new item of clothing.

There's no category. We've been selling in eBay in tops and jumpers and, as you can see, it's neither.

The commitment and passion are evident, but what of the business?

Retail guru Theo Paphitis knows this market well.

The Wingz, it's very similar to what Asian women wear underneath their saris.

Asian women wear a tight-fitting sleeve that covers the bust and the back,

whereas this allows you to wear any neckline and any backline.

This one is done as a wedding. Most wedding dresses, the best ones you can get are strapless.

-You have this manufactured in India. What volume do you do? It must be small runs.

-It is.

The minimum order is 30 pieces.

OK. Are you working from home?

-Yes, yeah.

-The stock is stored in a converted loft at my father's.

Not at our house. We have three children, so we're tight for space.

-Michelle, Steve, hi. I'm Deborah.

-Hi, Deborah.

-How much do the Wingz sell for?

-15.99.

-And 14.99.

-And 14.99.

-And what are they costing you to buy?

About £2.80.

I'm just trying to understand why is this better than using a shrug or a shawl or a cardigan?

The thing is, there's plenty of options to do the thing you're trying to do.

But these... Sorry. These are comfortable and it enables you to use the things in your wardrobe

more than you ever could have before. The things that hang unused

because there's no cardigan to go with it or it's sleeveless...

-These change the shape of a dress.

-The trouble is if you stick sleeves

-on a dress that was designed not to have sleeves...

-You've designed a dress for yourself.

The budding entrepreneurs are proving adept at handling the Dragons' questions.

Hilary Devey appears impressed.

-Can I have a look, please?

-Yeah.

-We did have... The patent...

-Can I just have a look how it's attached to your dress?

-It's not.

It's just underneath.

And it's really comfortable. I can move. With a cardie, I can't move my arms forward.

-So I suppose if you were slimmer, you could wear tops without a bra.

-You could if you wanted.

-You've registered this?

-The band that goes under the bust and carries sleeves is registered.

Steven, Michelle, are you saying you've got a design register or a patent? What have you got?

We saw a patent attorney and he advised, because it's unique, to get a good element of protection.

-I did the applications myself...

-So you think you've got an absolute patent

-to stop anyone else making anything similar?

-Yes.

-There's no guarantee. We can apply for them...

-You can't possibly have anything that prevents anyone else selling the same thing.

-Why?

-Yeah, why?

Loads of people will challenge your patent, people who make clothes,

constantly will challenge you. It's a piece of cloth.

You can't possibly have total protection for this.

It's Michelle and Steve's first knockback, but all five Dragons are still in.

Deborah Meaden looks to be the first to make up her mind.

Be very careful about your patent. What people do with patents is take the first step.

They don't spend any money and then they have to start paying their fees and then they need advice.

"I've already spent £5,000. I might as well finish the process."

And I've watched people rack up £40,000, £50,000-worth of fees on patents and not end up with one.

And...I'm just not convinced.

Particularly at about £14, £15. These are not throwaway pieces of kit.

I just think there's other ways of doing it. Really sorry, guys.

I won't be investing. I'm out.

A lesson in intellectual property from the experienced investor.

The duo lose a first Dragon. And Theo Paphitis is now ready to show his hand.

When people ask me, "If you had limited cash

"and had to start a business, what would you do?"

the first thing I always say is I'd do e-commerce.

That's how I'd grow my business. And you have adopted that same model.

So for that I congratulate you.

But then you go against the model

when you ask me for £60,000.

-Cos now we're talking about serious investment.

-Yeah.

I do like what you're doing and I would say to you

carry on doing it. It might take you that little bit longer,

but you'll still achieve your end goal.

-I'm out.

-Thank you.

Michelle, Steve, I do like the product.

I can see that there might be a market for it.

Very often going out with a product, getting the brand out there,

will have a decent carry for you.

Being first to market and your brand existence is going to do it.

People are going to copy it, bring out derivatives of it, if it's successful. They won't if it's not.

I wish you the best of luck. It's not something I can invest in, so I'll declare myself out.

Thank you.

The duo seem to be getting plenty of advice,

but as yet no cash.

Will Duncan Bannatyne rescue their hopes of investment?

Em...

The best advice I can give you is to knock on the doors of some shops, keep selling it online,

but it's not a business where you want an investor to put £60,000 in, who then wants his money back.

You will not make enough to pay that money back.

-I'm out, sorry.

-Thank you.

Well, actually, I love it.

But I personally don't think you need an investor.

For £60,000, I'd rather be the majority shareholder

which isn't then fair to the shareholders you've already got.

-But I love your product.

-Thank you.

And I think you've got a niche market, but that's exactly what it is - a niche market.

I really wish you good luck.

-Thank you.

-Cheers.

-I'm out.

Michelle and Steve managed to tame the Dragons, but not to extract the investment they needed.

They leave with nothing.

Other entrepreneurs who tried and failed in the Den included inventor Jim Jamieson from Salford.

He wanted £80,000 to bring to market his new supporting legs for lorry trailers.

That will lock.

There go the legs.

The pins lock.

Traditional devices use hand-wound handles to raise and lower it.

This is pneumatically operated. Safer, better and faster.

Truck technology is not exactly the specialist subject to four Dragons, so clarity was vital.

So there was actually nobody in the world who has got a telescopic landing leg?

No.

-But there are trailer landing legs.

-Yes.

-But not telescopic.

-Yeah, there are.

OK, Jim, really concentrate.

-There are telescopic landing legs?

-Yeah.

-Did you just say there weren't?

-They are screw-driven inside.

-You're just too confusing.

-I know.

Beguiled perhaps, but still bewildered,

the industry expert eventually lent some clarity to proceedings.

The haulage sector work on very, very low margins.

If you had come in here and asked for £25,000,

I'd have snapped your hand off.

But for £80,000, as much as I love it,

-I'm out.

-OK.

Marion Mainstone from London came into the Den needing £200,000

to start mass-producing her novel foldaway furniture.

I've formed Flip It Sales to fully exploit two patents.

So far, I've designed articles of furniture.

They open and close with one simple movement. The Flip It chair has received three innovation awards.

But the simplicity of the product was overshadowed by the complexity of the business proposition.

-I'm proposing a completely new company.

-Why a new company?

Because the company that funded the design and development of the chair

wants to lease out its IPR and doesn't want to operate any more.

But if I was to invest in a business, every one of those chairs that I sold

-I would have to pay royalty to the first company?

-Yeah.

I really like it. I like the look as well as the mechanism of it.

The issue for me is that you've come in here asking for £200,000

in a company that doesn't even own the patent.

-I'm out.

-Thank you.

Dublin-born industrial designer Aidan Quinn and his business partner Gemma Rowe from Stockport are next

with their eye-catching product, but not only does it have to tick all the right boxes in the design,

it also has to make a good business.

Hello, Dragons. My name is Aidan Quinn and this is my business partner, Gemma Rowe.

I'm the managing director of EcoHab Homes and O-Pod Buildings.

We're here looking for an investment of £75,000 for a 15% share of both businesses.

EcoHab builds super energy-efficient dome-shaped eco homes.

The idea is to minimise the carbon footprint of the home and to reduce energy consumption by at least 90%.

Here we have an example of three pods we're currently building.

This one is ideal for a small family.

The price is approximately £100,000.

We need a bigger manufacturing facility and we have come across problems with planning delays,

buildings control and lengthy development costs.

So approximately a year ago Aidan designed a new product to eliminate all of our problems.

And O-Pod Buildings was born. This doesn't require planning permission,

it's got a much greater gross profit margin and it sells.

In the first 12 months, we've turned over £160,000

-with a tiny marketing budget.

-As George Osborne said, "Let's get Britain back to manufacturing."

-We welcome your questions.

-Can I go inside?

-Absolutely.

-DUNCAN:

-Can you fit five Dragons in?

-Yeah!

A large-sized product from Aidan and Gemma, but will the Dragons see it as a large-scale opportunity?

Offering 15% equity,

they're looking for a £75,000 investment in their pre-fabricated garden structures

and innovative designs for environmentally-friendly homes.

Theo Paphitis is first to question the Stockport-based business partners.

OK, that was interesting, but let's get down to some serious business.

-What's the trading history of Eco Homes?

-EcoHab.

We've turned over approximately £140,000 with the EcoHabs. All of that has gone back in...

-Over how many years?

-Four years.

-Have you made any money?

-No, we've lost money.

-How much?

-I've invested about £200,000.

-But it's nearly developed and completed at this stage.

-OK. That's part of it.

-But also there's a second leg of the business.

-The O-Pod is separate.

-This is garden rooms, garden offices.

-OK.

-Talk to me about the cost and fabrication of this.

-The manufacture of a three-metre is around £3,000.

-And you sell it for?

-We sell that for about £7,000.

-Retail price?

-That's right.

-OK. Explain to me, just to make sure I've got it right,

why this doesn't need planning or building control?

There's an allowance of 30 square metres in your garden, no more than 4 metres high. This falls within it.

A confident start from the well-informed duo,

but Peter Jones is not looking impressed.

If I was going to look at a home, I look at that and I don't see a home, I see a bee hive.

There is a huge attraction to a structure of this shape.

-Really?

-Yes, indeed.

I-I'm shocked.

We're not going to focus on this for the time being.

That's a consideration for later.

We go to that and I see something like an old storage water tank with a hole in it for a window.

-What do you see?

-It comes back to the point that some people find that incredibly attractive. Not everybody.

-We only need a small percentage of people.

-I get that, but that is weird to me.

It's a fact. We've sold 20 and we haven't really got going.

I'm going to be brutally honest. I don't want to invest in the world's most expensive bee hive.

So that's that. And that is just a wooden-clad...

tank, that I think would be the last thing I would want.

-So you can tell that it's clearly not an investment for me.

-OK.

-So I'm out.

-I appreciate that.

Thank you.

It's an early out and the duo's initial confidence takes an immediate hit.

Will Deborah Meaden be more forgiving?

Gemma, Aidan, hi. I'm Deborah.

I think you're really presenting as a business opportunity, I think,

the building behind us. This is a little bit of history.

I think the only thing going for it is price. There are some very lovely pods that I'm sure you've seen

with great big windows on the front so you have lovely vistas out.

-So how competitive are you?

-We're probably about 25% less than our competitors,

-but nobody makes a round one.

-Well, they do, just so you know.

-Oh, right.

-Yeah.

-In fact, I saw one recently...

-Was it spherical, the one you're talking about?

-Yes.

-All right, OK.

I'm aware of that one. It's £16,000.

It is attractive, but it doesn't offer the same space or functionality as this one.

-So what's different?

-You get a full footprint of three metres with this.

And you can put your own shelves in. If you get the bespoke circular one, it's very difficult to customise it.

Well...

I think you'll sell some,

but I don't think it's going to be a huge business. I think it will be terribly specialist.

So I'm afraid I won't be investing.

I'm out.

A second blow and Aidan and Gemma's options are fast running out.

Will Hilary Devey offer the duo's business more scrutiny?

I'm all for green, totally, utterly. 100%.

I've got a beautiful fishing lodge in my grounds of my home

and it's been insulated to the nth degree, it's got solar panels on the roof, et cetera, et cetera.

And it's lovely looking with the balconies that you can sit on at night and look over the lakes.

In fact, I often think I'd rather live in that.

And the cost of that, which is three or four times the size of that,

was not much more than what you're selling that for.

-So I'm sorry, I'm out.

-No problem.

Aidan, Gemma, are you related?

-No.

-No.

-How did you meet?

-I'm an interior designer.

I saw the EcoHab and fell in love with it and wanted to work with him

and then a year ago we started promoting the O-Pod.

-You have an office somewhere?

-Yes.

-We do. It's actually a four-metre pod attached to a three-metre one.

Right. And you sit in your pod trying to sell eco-pods.

Not trying to. Actually selling them and the numbers are increasing.

-So if you don't get investment, what'll happen?

-We'll carry on.

We're on target to double our turnover this year.

I wish you both the best of luck, but I'm not convinced, so I'm out.

Two more Dragons out and the duo's investment dreams

now lie entirely with Theo Paphitis,

but has he spotted something his rivals have not?

Aidan, Gemma,

-your last year did £160,000?

-Yeah.

-And this will be a record year.

-What's the numbers?

-300,000 is our estimated turnover.

-So we'll have a gross profit of 70,000, net profit of approximately 40,000.

-And that...

-Oh, sorry.

-No, sorry, gross profit of 150, net profit of 70. That was last year, I'm sorry.

-150 gross?

-And net of...?

-Net of 70.

-Net of 70.

-Yes.

-What's your order book like?

-At the moment we have six orders, but 12 people coming on stream

and we're expecting this to pick up very quickly.

Right.

-I actually like it. I like the look of it.

-Thank you.

But it's early doors.

I'm going to make you an offer,

but I'm not going to make you an offer on the terms you asked for.

For the full 75,000,

but I'm going to be wanting

forty-five per cent of the business.

We really believe the risk element is quite low. The potential of the product is...

Potential... Potential is...

-just a guess. I've got to assess what I think the potential is.

-Mm.

Can you meet us halfway at 30%?

The risk/reward ratio is not there at 30%.

We do know the product makes money. It's got a great profit margin and it does sell.

This is what we are focusing on now

-and it would be fantastic to have you onboard, but this is...

-OK.

I'll make you one final offer.

On the basis that your accounts will show 160 turnover

and 40,000 profit

I will come down to 40%.

What if we meet all our targets within 12 months

and we give you 50% of your investment back

and you reduce your shareholding to 30%?

-I'll take 40%, day one.

-Mm-hm.

-I give you £37,500 as equity.

-Mm-hm.

And £37,500 as an interest-free loan.

-Then if you hit your targets and you repaid the interest-free loan...

-Yeah.

-..I'd have left £37,500 as equity and that then leaves me 30%.

-That's right.

-Is that the deal?

-That's the deal.

You've got a deal.

-Well done.

-Thank you.

-Aidan and Gemma have done it.

It took some quick-witted negotiation, but they leave having shaken hands on a deal

with a well-connected multi-millionaire.

It's Theo that we wanted, so we felt we had the right person, the right investor.

It'll come down to 30%. He's happy with the arrangement.

So it's up to us to produce the results and we know we will.

So as we look back on the day, what Aidan and Gemma have proved is

that it's not important for everybody to like your product.

What matters is that enough people like it for it to succeed.

And you don't need all the Dragons. One investor with all the money is quite enough.

If you'd like to know what it's like pitching to the Dragons, press the red button now

to hear from Aidan and Gemma.

If you think your business has what it takes to secure investment, you can apply online -

bbc.co.uk/dragonsden Goodbye.

Next time on Dragons' Den:

You've got to make some money at some point.

-It's not going to happen in my lifetime.

-No, but it could in mine.

-Did you try?

-I didn't, no. Oh, don't look disappointed, Theo.

I love it, but the valuation is crazy.

Without listening to the others, I'd like to make you an offer.

Subtitles by Subtext for Red Bee Media Ltd - 2011

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