Episode 8 Dragons' Den


Episode 8

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

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

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

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

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

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

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Frankly, the beast doesn't change.

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When that beast is hungry, it wants feeding.

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

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Hotel and health club owner Duncan Bannatyne,

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leisure industry expert Deborah Meaden,

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retail magnate Theo Paphitis,

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telecoms giant Peter Jones...

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

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

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

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Welcome to the Dragons' Den.

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We have a succession of entrepreneurs keen to do business

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with our five multi-millionaire investors.

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There is just one challenge.

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

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

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

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

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Will our first entrepreneurs convince them to invest?

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

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Together we run a record label called RKA Records

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

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

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

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

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

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(Scarlette.)

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

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

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Here you can see some pictures of our artists.

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Each artist has a very marketable style and look

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

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

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

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MUSIC: "Slowdown" - Scarlette

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

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# What was the reason? Why are you leaving?

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# Victim to the sword... #

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

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

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Please feel free to ask any questions.

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Aspiring music moguls Ryan Ashmore and Liam Webb from Leicestershire

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

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

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Hilary Devey looks intrigued.

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-How old are you?

-We're both 18.

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-Well done.

-Thank you.

-Well done.

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Tell me how you got into this business.

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Back in school, a friend was in a band.

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

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

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

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

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

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

-We drew up the contracts.

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-Did you get lawyers to draw them contracts up?

-Lawyers checked over them in Germany.

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

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We receive 80% and they get 20.

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We asked them what they feel would be fair

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and they were extremely happy with 20%.

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-I'm surprised.

-We were.

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

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

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Now Duncan Bannatyne wants to drill down into the financials.

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OK, gentlemen...

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

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

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

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

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Have you started any other businesses?

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I used to have a mobile disco company.

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-Yeah.

-I started that when I was 12.

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How much did you make?

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

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-What did you do with that?

-It's been spent.

-Right, OK.

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Where is the company based?

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-At my home.

-So it's in your bedroom?

-Basically, yeah.

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-No expenses really?

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

-Hosting for the website.

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

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the teenage entrepreneurs are charming the multi-millionaires.

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

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

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

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

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

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If one artist, God forbid, fails,

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

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And Ryan, have you got a reason?

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

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

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

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

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being involved in this with Hamfatter.

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

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

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We've got Chris, Marq and Scarlette.

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We feel the music is a lot like chart music.

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

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It's what's commercial.

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

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

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

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

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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.

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

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

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This is one of the hardest industries to crack

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and the number of people that succeed in this marketplace

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are literally counted on both your hands.

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

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-Thank you.

-Thanks a lot.

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

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Deborah Meaden is next to interrogate the duo.

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Ryan, Liam, hi, I'm Deborah.

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Um...

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I get quite a bit of music pitched to me

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

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

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

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

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I'd have to say the artists we have.

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

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so I'm back to "why you"?

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

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But we are trying exceptionally hard.

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

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

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

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

-We're just a bit overawed.

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-We are willing to do that.

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

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-Particularly the environment you're going into.

-Yeah.

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

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

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I don't get that from you two guys.

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-OK.

-OK.

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

-Thank you.

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Thank you. Thanks a lot.

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Right...

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

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

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

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-For any percentage of the business.

-Yeah.

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-So, chaps, I'm out.

-Thank you.

-Thank you.

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What really concerns me is that business

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-has to be fair and equitable for all parties.

-Yeah.

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

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

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I think if it turned successful,

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

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But how are you going to manage that?

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

-Yeah.

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It's not good business sense, is it?

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

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-Yeah.

-And what worries me is what then follows.

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

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Three Dragons out in quick succession.

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

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

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

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

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

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

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When would you see some revenue?

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

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

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-So you get 80%?

-Yeah.

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-Normally, it's split 50/50.

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

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

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

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I want 79% of the company.

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

-Yeah, sure.

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-We've got to take the opportunity.

-Yeah?

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We'd like to accept your offer.

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APPLAUSE

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

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

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

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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.

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

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

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-It will be an interesting adventure. Good luck.

-Thank you.

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

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will give them a better chance of investment.

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

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

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My company merchandises tri-namic balls.

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

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

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DANCE MUSIC

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

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

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

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-What did you call it?

-A tri-namic.

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

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There you are. Easy!

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

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

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

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

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A ball.

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In the end, Hilary Devey delivered the difficult business lesson

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to the fledgling entrepreneur.

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-How many have you sold to date?

-I've sold 5,500 units.

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

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

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

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Thank you.

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-They call me Lightning Jones.

-Good catch.

-Good catch, yeah.

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

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

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

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Hello, Dragons. My name is Richard Williams.

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This is my colleague, Gil Ostrander.

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

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We offer 20% equity

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in exchange for an investment of £50,000.

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Estate agency in the UK today does not work.

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There is a solution.

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

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and for 15 years in Europe. Gil?

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The solution is simple and yet radical.

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The paradigm of salaried employees in small, high street locations

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simply must change.

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

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to a straight commission model with an active sales force.

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We will establish a multiple listings system

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where one realtor office could list a property

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and another office could sell the property.

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

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Any questions are welcome.

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

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

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

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But Peter Jones looks confused.

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

-Hello, Peter.

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I like the sale board.

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

-Exactly.

-Yes.

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

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

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

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

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

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

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So now I've got two of your agents.

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That house is sold

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and I've charged 1.5% commission.

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What does the first agent that found the buyer get?

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-Half of the commission.

-So he gets 0.75%?

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-Exactly.

-What does Tom Hughes get?

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The other half of the commission.

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-What about poor Peter Jones?

-What about Peter Jones, the estate agent?

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OK, maximum half down to 15%.

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So I could get 15% of 1.5%?

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No, of the 0.75.

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

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The enigmatic entrepreneurs seem only to have confounded the Dragons.

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Can Theo Paphitis make sense of the proposition?

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

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-P Jones owns the office.

-Right.

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

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

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-225 quid.

-Yeah.

-You're absolutely correct.

-I'm not finished yet.

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-Neither was I, but go ahead.

-Well, I was talking.

-Go ahead. Continue, please.

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

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-Measured the house.

-Measured the house.

-Took photographs.

-Took photographs. 225 quid?!

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My turn?

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Yes, 225 quid.

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My turn?

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

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

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

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

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starts to be an interesting business model.

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

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Duncan Bannatyne is next to interrogate the duo.

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

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-Mm-hm.

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

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It doesn't matter how good you are.

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

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

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-Where?

-In the UK.

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-How many bought in America?

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

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Because you said this is how they sell in America

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

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I don't understand your point.

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

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

-Nor do I. That's MY point.

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

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

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

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and walks away from the deal.

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

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

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I used to recruit and run direct sales forces.

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

0:24:080:24:13

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

0:24:130:24:19

in the UK.

0:24:190:24:21

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

0:24:210:24:27

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

0:24:270:24:32

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

0:24:320:24:38

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

0:24:380:24:44

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

0:24:440:24:50

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

-OK.

0:24:500:24:57

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

-OK.

-I was part of that.

-Gil...

0:24:570:25:02

-I'm a refugee of that. Sorry.

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

0:25:020:25:08

-I'm trying. Go ahead.

-Do you know what?

0:25:080:25:11

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

0:25:110:25:15

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

0:25:150:25:20

I'm out.

0:25:200:25:22

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

0:25:240:25:29

results in the loss of a second Dragon.

0:25:290:25:33

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

0:25:330:25:37

OK, um, this model works in the States.

0:25:390:25:42

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

0:25:420:25:47

and without the protections of licensed agents,

0:25:470:25:51

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

0:25:510:25:57

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

0:25:570:26:01

You should be talking to some of the big operators,

0:26:010:26:05

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

0:26:050:26:11

-So for those reasons, I'm out.

-Thank you.

0:26:110:26:15

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

0:26:150:26:22

between 4 and 8%.

0:26:220:26:24

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

0:26:240:26:30

Here - 1.5%,

0:26:300:26:32

so there's not enough margin in the model.

0:26:320:26:37

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

0:26:380:26:43

but I think it's about paying people proper money

0:26:430:26:47

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

0:26:470:26:52

I'm going to say I'm out.

0:26:520:26:55

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

0:26:570:27:00

Now only Theo Paphitis can rescue their dreams of investment.

0:27:000:27:04

Richard, what's your history?

0:27:070:27:10

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

0:27:100:27:16

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

0:27:160:27:21

-Now we're getting there. What happened?

-It went belly-up.

0:27:210:27:25

And the model there was...?

0:27:250:27:28

The realtor method.

0:27:280:27:31

OK.

0:27:330:27:35

If it failed so miserably last time...

0:27:350:27:39

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

0:27:400:27:43

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

0:27:430:27:47

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

0:27:470:27:52

-The people fail.

-Is that true?

-Yes.

0:27:520:27:54

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

0:27:540:28:01

That takes care of 1% of the airplane accidents.

0:28:010:28:04

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

0:28:040:28:09

or the market goes in a completely different direction,

0:28:090:28:13

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

0:28:130:28:16

This, gentlemen, is already shown to have failed.

0:28:160:28:20

You're following fool's gold.

0:28:200:28:23

It won't work.

0:28:230:28:26

And for those reasons...

0:28:260:28:28

..this fool will not be investing,

0:28:300:28:33

so I'm out.

0:28:330:28:35

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

0:28:380:28:43

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

0:28:430:28:48

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

0:28:530:28:58

Mark Shaw from Glasgow hoped the Dragons would fund his crusade

0:28:580:29:02

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

0:29:020:29:06

All he needed was £50,000.

0:29:060:29:10

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

0:29:100:29:14

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

0:29:140:29:20

Four Dragons tucked straight in to the delicacy on offer,

0:29:200:29:24

but one erred more on the side of caution.

0:29:240:29:27

-Give me the specific ingredients of that.

-Lamb's liver and lungs.

0:29:270:29:32

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

-Yeah. Mixed with spices.

0:29:320:29:36

What? To hide the taste or...?

0:29:360:29:39

Don't start insulting the Scottish dish!

0:29:390:29:42

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

0:29:420:29:48

£50,000 for 10%.

0:29:490:29:52

-Yeah.

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

-Yeah.

-What...?

0:29:520:29:58

-Why?

-I based my figures on the projected sales.

0:29:580:30:02

OK, so if I had half a million quid,

0:30:020:30:05

could I create your haggis sausage?

0:30:050:30:09

-Yes.

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

-Yes.

0:30:090:30:14

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

0:30:140:30:18

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

0:30:180:30:23

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

0:30:230:30:27

You've got a point.

0:30:270:30:29

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

0:30:320:30:37

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

0:30:370:30:43

-Yeah.

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

0:30:430:30:49

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

0:30:490:30:56

-For that reason, I'm out.

-Thank you.

0:30:560:30:59

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

-We'll accept your offer.

0:30:590:31:05

THEO CHEERS

0:31:050:31:07

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

0:31:070:31:11

press the red button at the end of the programme.

0:31:110:31:16

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

0:31:180:31:24

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

0:31:240:31:28

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

0:31:280:31:32

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

0:31:320:31:38

Let's see how they get on.

0:31:380:31:41

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

-Hello.

0:32:010:32:05

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

0:32:050:32:10

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

0:32:120:32:18

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

0:32:210:32:28

There are many reasons that women appreciate arm coverage.

0:32:280:32:32

These can range from my personal reason, lipoedema,

0:32:320:32:35

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

0:32:350:32:41

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

0:32:410:32:45

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

0:32:450:32:50

and they come in four sizes. Steve?

0:32:500:32:53

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

0:32:530:33:00

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

0:33:000:33:06

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

0:33:060:33:10

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

0:33:130:33:17

to expand their online clothing brand into the mass market.

0:33:170:33:22

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

0:33:220:33:26

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

-Hi.

-Hi, Peter.

0:33:300:33:33

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

-I was busy being a mum.

0:33:330:33:39

-OK.

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

0:33:390:33:46

-OK, but not experience in the clothing marketplace.

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

0:33:460:33:53

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

-Yeah.

0:33:530:33:58

-And it's always been a problem part.

-Where do you get the clothing from?

0:33:580:34:03

-From India.

-And you design the pieces?

-I design all the pieces.

0:34:030:34:07

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

-Between the two of us, £8,200.

0:34:070:34:12

The total business to date is £28,400.

0:34:120:34:17

-Where did you get the extra £20,000?

-Family and friends.

0:34:170:34:21

-Do they own part of the company?

-Yes.

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

0:34:210:34:27

-11,000.

-£11,000?

-Yeah.

0:34:270:34:31

-Right.

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

0:34:310:34:37

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

0:34:370:34:43

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

0:34:460:34:51

Retail guru Theo Paphitis knows this market well.

0:34:510:34:55

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

0:34:570:35:03

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

0:35:030:35:08

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

0:35:080:35:13

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

0:35:130:35:20

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

-It is.

0:35:200:35:25

The minimum order is 30 pieces.

0:35:250:35:28

OK. Are you working from home?

0:35:280:35:31

-Yes, yeah.

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

0:35:310:35:37

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

0:35:370:35:42

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

-Hi, Deborah.

-How much do the Wingz sell for?

0:35:420:35:48

-15.99.

-And 14.99.

-And 14.99.

-And what are they costing you to buy?

0:35:480:35:53

About £2.80.

0:35:530:35:56

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

0:35:560:36:03

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

0:36:030:36:09

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

0:36:090:36:15

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

0:36:150:36:19

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

0:36:190:36:24

-These change the shape of a dress.

-The trouble is if you stick sleeves

0:36:240:36:29

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

-You've designed a dress for yourself.

0:36:290:36:35

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

0:36:370:36:42

Hilary Devey appears impressed.

0:36:420:36:45

-Can I have a look, please?

-Yeah.

0:36:480:36:51

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

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

-It's not.

0:36:560:37:02

It's just underneath.

0:37:020:37:05

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

0:37:060:37:13

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

-You could if you wanted.

0:37:130:37:19

-You've registered this?

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

0:37:190:37:26

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

0:37:270:37:34

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

0:37:340:37:41

-I did the applications myself...

-So you think you've got an absolute patent

0:37:410:37:47

-to stop anyone else making anything similar?

-Yes.

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

0:37:470:37:53

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

-Why?

-Yeah, why?

0:37:530:38:00

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

0:38:000:38:05

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

0:38:050:38:09

You can't possibly have total protection for this.

0:38:090:38:13

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

0:38:160:38:22

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

0:38:220:38:26

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

0:38:310:38:37

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

0:38:370:38:43

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

0:38:430:38:47

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

0:38:470:38:55

And...I'm just not convinced.

0:38:560:39:00

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

0:39:010:39:06

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

0:39:060:39:11

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

0:39:110:39:13

A lesson in intellectual property from the experienced investor.

0:39:160:39:20

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

0:39:200:39:27

When people ask me, "If you had limited cash

0:39:300:39:34

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

0:39:340:39:38

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

0:39:380:39:43

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

0:39:430:39:49

So for that I congratulate you.

0:39:490:39:52

But then you go against the model

0:39:530:39:55

when you ask me for £60,000.

0:39:550:39:58

-Cos now we're talking about serious investment.

-Yeah.

0:39:580:40:02

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

0:40:020:40:06

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

0:40:060:40:11

but you'll still achieve your end goal.

0:40:110:40:16

-I'm out.

-Thank you.

0:40:160:40:18

Michelle, Steve, I do like the product.

0:40:180:40:22

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

0:40:220:40:26

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

0:40:260:40:30

will have a decent carry for you.

0:40:300:40:33

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

0:40:330:40:38

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

0:40:380:40:45

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

0:40:450:40:50

Thank you.

0:40:500:40:53

The duo seem to be getting plenty of advice,

0:40:540:40:58

but as yet no cash.

0:40:580:41:00

Will Duncan Bannatyne rescue their hopes of investment?

0:41:000:41:05

Em...

0:41:060:41:08

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

0:41:080:41:14

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

0:41:140:41:20

You will not make enough to pay that money back.

0:41:200:41:24

-I'm out, sorry.

-Thank you.

0:41:240:41:27

Well, actually, I love it.

0:41:320:41:34

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

0:41:370:41:42

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

0:41:420:41:46

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

0:41:460:41:50

-But I love your product.

-Thank you.

0:41:500:41:54

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

0:41:540:42:01

I really wish you good luck.

0:42:010:42:04

-Thank you.

-Cheers.

-I'm out.

0:42:040:42:07

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

0:42:080:42:14

They leave with nothing.

0:42:140:42:16

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

0:42:250:42:30

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

0:42:300:42:36

That will lock.

0:42:360:42:38

There go the legs.

0:42:380:42:41

The pins lock.

0:42:410:42:43

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

0:42:430:42:49

This is pneumatically operated. Safer, better and faster.

0:42:490:42:52

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

0:42:520:42:59

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

0:43:000:43:06

No.

0:43:060:43:08

-But there are trailer landing legs.

-Yes.

-But not telescopic.

-Yeah, there are.

0:43:080:43:13

OK, Jim, really concentrate.

0:43:130:43:16

-There are telescopic landing legs?

-Yeah.

0:43:160:43:19

-Did you just say there weren't?

-They are screw-driven inside.

0:43:190:43:23

-You're just too confusing.

-I know.

0:43:230:43:26

Beguiled perhaps, but still bewildered,

0:43:270:43:31

the industry expert eventually lent some clarity to proceedings.

0:43:310:43:35

The haulage sector work on very, very low margins.

0:43:350:43:39

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

0:43:390:43:44

I'd have snapped your hand off.

0:43:440:43:46

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

0:43:460:43:51

-I'm out.

-OK.

0:43:510:43:53

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

0:43:550:44:00

to start mass-producing her novel foldaway furniture.

0:44:000:44:04

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

0:44:040:44:08

So far, I've designed articles of furniture.

0:44:080:44:12

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

0:44:120:44:18

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

0:44:190:44:26

-I'm proposing a completely new company.

-Why a new company?

0:44:260:44:30

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

0:44:300:44:36

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

0:44:360:44:40

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

0:44:400:44:45

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

-Yeah.

0:44:450:44:51

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

0:44:510:44:55

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

0:44:550:45:00

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

0:45:000:45:04

-I'm out.

-Thank you.

0:45:040:45:06

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

0:45:110:45:17

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

0:45:170:45:23

it also has to make a good business.

0:45:230:45:26

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

0:45:410:45:47

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

0:45:470:45:52

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

0:45:520:45:59

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

0:46:010:46:06

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

0:46:060:46:14

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

0:46:140:46:19

This one is ideal for a small family.

0:46:190:46:22

The price is approximately £100,000.

0:46:220:46:25

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

0:46:250:46:31

buildings control and lengthy development costs.

0:46:310:46:35

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

0:46:350:46:41

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

0:46:460:46:50

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

0:46:500:46:54

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

0:46:540:46:58

-with a tiny marketing budget.

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

0:46:580:47:05

-We welcome your questions.

-Can I go inside?

-Absolutely.

0:47:050:47:08

-DUNCAN:

-Can you fit five Dragons in?

-Yeah!

0:47:080:47:12

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

0:47:140:47:21

Offering 15% equity,

0:47:210:47:23

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

0:47:230:47:29

and innovative designs for environmentally-friendly homes.

0:47:290:47:33

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

0:47:330:47:39

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

0:47:410:47:47

-What's the trading history of Eco Homes?

-EcoHab.

0:47:470:47:50

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

0:47:500:47:57

-Over how many years?

-Four years.

-Have you made any money?

0:47:570:48:02

-No, we've lost money.

-How much?

-I've invested about £200,000.

0:48:020:48:07

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

-OK. That's part of it.

0:48:070:48:12

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

-The O-Pod is separate.

0:48:120:48:17

-This is garden rooms, garden offices.

-OK.

0:48:170:48:20

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

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

0:48:200:48:28

-And you sell it for?

-We sell that for about £7,000.

-Retail price?

0:48:280:48:33

-That's right.

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

0:48:330:48:37

why this doesn't need planning or building control?

0:48:370:48:41

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

0:48:410:48:47

A confident start from the well-informed duo,

0:48:500:48:54

but Peter Jones is not looking impressed.

0:48:540:48:58

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.

0:48:580:49:05

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

0:49:050:49:10

-Really?

-Yes, indeed.

0:49:100:49:12

I-I'm shocked.

0:49:140:49:17

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

0:49:170:49:21

That's a consideration for later.

0:49:210:49:23

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

0:49:230:49:30

-What do you see?

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

0:49:300:49:37

-We only need a small percentage of people.

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

0:49:370:49:43

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

0:49:430:49:48

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

0:49:510:49:57

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

0:49:570:50:02

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

0:50:020:50:07

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

-OK.

-So I'm out.

-I appreciate that.

0:50:070:50:14

Thank you.

0:50:140:50:16

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

0:50:180:50:25

Will Deborah Meaden be more forgiving?

0:50:250:50:29

Gemma, Aidan, hi. I'm Deborah.

0:50:290:50:32

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

0:50:320:50:37

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

0:50:370:50:41

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

0:50:410:50:48

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

0:50:480:50:53

-So how competitive are you?

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

0:50:530:50:59

-but nobody makes a round one.

-Well, they do, just so you know.

-Oh, right.

-Yeah.

0:50:590:51:04

-In fact, I saw one recently...

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

-Yes.

-All right, OK.

0:51:040:51:12

I'm aware of that one. It's £16,000.

0:51:120:51:15

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

0:51:150:51:21

-So what's different?

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

0:51:210:51:25

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

0:51:250:51:32

Well...

0:51:320:51:34

I think you'll sell some,

0:51:340:51:36

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

0:51:360:51:42

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

0:51:420:51:45

I'm out.

0:51:460:51:48

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

0:51:490:51:55

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

0:51:550:52:00

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

0:52:020:52:05

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

0:52:050:52:10

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

0:52:100:52:16

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

0:52:160:52:24

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

0:52:240:52:28

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

0:52:280:52:32

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

0:52:320:52:36

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

-No problem.

0:52:360:52:40

Aidan, Gemma, are you related?

0:52:400:52:42

-No.

-No.

-How did you meet?

-I'm an interior designer.

0:52:420:52:46

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

0:52:460:52:51

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

0:52:510:52:55

-You have an office somewhere?

-Yes.

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

0:52:550:53:02

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

0:53:020:53:06

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

0:53:060:53:11

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

-We'll carry on.

0:53:110:53:15

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

0:53:150:53:20

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

0:53:220:53:26

Two more Dragons out and the duo's investment dreams

0:53:310:53:35

now lie entirely with Theo Paphitis,

0:53:350:53:38

but has he spotted something his rivals have not?

0:53:380:53:43

Aidan, Gemma,

0:53:450:53:47

-your last year did £160,000?

-Yeah.

-And this will be a record year.

0:53:470:53:52

-What's the numbers?

-300,000 is our estimated turnover.

0:53:520:53:56

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

-And that...

-Oh, sorry.

0:53:560:54:02

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

-150 gross?

0:54:020:54:08

-And net of...?

-Net of 70.

-Net of 70.

-Yes.

0:54:080:54:13

-What's your order book like?

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

0:54:130:54:19

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

0:54:190:54:24

Right.

0:54:250:54:26

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

-Thank you.

0:54:290:54:34

But it's early doors.

0:54:340:54:36

I'm going to make you an offer,

0:54:410:54:44

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

0:54:440:54:48

For the full 75,000,

0:54:510:54:54

but I'm going to be wanting

0:54:560:54:58

forty-five per cent of the business.

0:54:590:55:04

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

0:55:110:55:17

Potential... Potential is...

0:55:170:55:20

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

-Mm.

0:55:210:55:25

Can you meet us halfway at 30%?

0:55:310:55:34

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

0:55:420:55:46

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

0:55:490:55:54

This is what we are focusing on now

0:55:540:55:57

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

-OK.

0:55:570:56:02

I'll make you one final offer.

0:56:020:56:05

On the basis that your accounts will show 160 turnover

0:56:080:56:13

and 40,000 profit

0:56:130:56:15

I will come down to 40%.

0:56:150:56:19

What if we meet all our targets within 12 months

0:56:200:56:25

and we give you 50% of your investment back

0:56:250:56:30

and you reduce your shareholding to 30%?

0:56:300:56:34

-I'll take 40%, day one.

-Mm-hm.

0:56:390:56:43

-I give you £37,500 as equity.

-Mm-hm.

0:56:450:56:49

And £37,500 as an interest-free loan.

0:56:490:56:53

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

-Yeah.

0:56:540:56:59

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

-That's right.

0:56:590:57:06

-Is that the deal?

-That's the deal.

0:57:060:57:09

You've got a deal.

0:57:110:57:14

-Well done.

-Thank you.

-Aidan and Gemma have done it.

0:57:140:57:18

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

0:57:180:57:25

with a well-connected multi-millionaire.

0:57:250:57:29

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

0:57:290:57:35

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

0:57:350:57:39

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

0:57:390:57:43

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

0:57:520:57:56

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

0:57:560:58:00

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

0:58:000:58:04

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

0:58:040:58:10

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

0:58:100:58:16

to hear from Aidan and Gemma.

0:58:160:58:18

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

0:58:180:58:24

bbc.co.uk/dragonsden Goodbye.

0:58:240:58:28

Next time on Dragons' Den:

0:58:280:58:31

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

0:58:310:58:35

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

-No, but it could in mine.

0:58:350:58:40

-Did you try?

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

0:58:410:58:46

I love it, but the valuation is crazy.

0:58:460:58:50

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

0:58:500:58:55

Subtitles by Subtext for Red Bee Media Ltd - 2011

0:59:060:59:10

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0:59:110:59:13

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