1. www.northwestbusinessinsider.com4 insider MAY 2015
Providing Outcider with the tools to prepare for long-term success.
We did it for him. Let’s do it for you.
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0161 359 3050
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Providing Outcider with the tools to prepare for long-term success.
We did it for him. Let’s do it for you.
Read David’s story at www.businessgrowthhub.com
0161 359 3050
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ARETHEDRAGONS
GOODFORBUSINESS?
ENTREPRENEURS HAVE BEEN TRYING THEIR LUCK IN FRONT OF THE TV DRAGONS FOR A DECADE. JENNY BROOKFIELD
LOOKS AT HOW NORTH WEST BUSINESSES FARED, AND ASKS WHAT HAPPENED WHEN THE CAMERAS STOPPED ROLLING
S
urrounded by wads of crisp bank notes,
the impression on Dragons’ Den is that
money is no object. For ten years view-
ers have watched multi-millionaires invest
their own cash in businesses for a share of
the equity.
With filming on the 13th series taking
place at Salford’s MediaCityUK, Insider
decided to ask how much have the Dragons
actually invested? The answer is surprisingly
little and research has found that only half the
money pledged on the TV actually goes to
the companies pitching for it.
According to our investigation, £14.8m has
been pledged during the 12 series completed
so far – which equates to £1.2m per series –
a drop in the ocean considering Peter Jones’
wealth alone is estimated at £475m. Clearly
he is shrewd about which businesses he
should or should not invest in.
More surprising is the discovery that not
all the deals seen on TV go ahead, although
there’s no suggestion of fault on either side.
The rules listed on the BBC’s website state
that the deal agreed on the day is an unwrit-
ten agreement, which neither party is legally
obliged to complete, following standard due
diligence checks and additional meetings.
According to telecoms company Tiger
Mobiles, less than half of all pledges became
investments. The Leeds-based business,
which unsuccessfully applied to be on the
show in 2008, carried out research into all
investments made in the first 11 series. It
found that 76 out of the 143 investments
agreed (53 per cent) never went through. In
monetary terms, of the £13m pledged during
the first 11 series, just £5.8m was invested.
The BBC failed to provide a comment, but
THE BIG QUESTION
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2. www.northwestbusinessinsider.com insider MAY 2015 5
THE BIG QUESTION
EUROPEAN UNION
Investing in Your Future
European Regional
Development Fund 2007-13
LET’S
DO THIS.
#LetsDoThisBGH
1939INSMAG04/15
15/04/2015 20:13
EUROPEAN UNION
Investing in Your Future
European Regional
Development Fund 2007-13
LET’S
DO THIS.
#LetsDoThisBGH
1939INSMAG04/15
15/04/2015 20:13
INSIDER CAUGHT UP WITH SOME NORTH WEST ENTREPRENEURS
WHO GOT GRILLED ON DRAGONS’ DEN AND ASKED: WAS IT WORTH IT?
experienced former Dragon Theo Paphitis
spoke to Insider during a visit to Manchester
Grammar School. “Don’t forget it’s a TV show,”
he said. “It engages, stimulates and inspires
people. You’ve got the magic of TV, and PR.
It’s done as an entertainment show but it’s
also educational and makes business simple.
People complicate business.”
Paphitis invested in 29 companies during
his nine years in the den. “I’ve had the good,
the bad and the ugly,” he said. “I’ve lost my
money on some pretty quickly. I came in for
the second series, invested in some stuff and
very quickly got some real good lessons.”
Viewers watched the entrepreneur pledge
£250,000 into trading hub Zapper in ex-
change for a 30 per cent stake. “He declined
to take my money in the end,” recalled
Paphitis. “I thought it was a brilliant idea but it
needed a lot of money. It was a tough nego-
tiation. When he got home he wasn’t happy.
That didn’t go through.”
He had more success with Bog in a Bag,
which consisted of a stool that transformed
into a toilet with the help of a hole and a
degradable bag. It wasn’t to everyone’s taste
but Paphitis was won over by Kate Castle’s
excellent pitch and bought 30 per cent
for a £50,000 investment. “I’m still in that
investment and I love it,” said Paphitis. “That
epitomises the difference in my investment
criteria. I started investing in the people
rather than the product.”
One of his best investments was in Magic
Whiteboard, alongside Deborah Meaden. The
founders accepted £100,000 for 40 per cent
equity in their business. “They have done
brilliantly,” said Paphitis. “Last summer [man-
aging director] Neil Westwood came to see
us and said we’ve been great but he bought
us both out. It made up for all the rubbish
investments I made. It was a big multiple.” n
PRIMALPARKING
“A lot of people say they don’t pay the money
and sometimes don’t follow through, but
you have to remember they don’t even know
who’s going down the stairs,” says Harrison
Woods, who appeared on the programme in
April 2012. “They have to make a snap de-
cision on your character and how believable
you are in a short space of time, and then a
lot more goes on afterwards.”
Woods, at the time the youngest person to
enter the Den at the age of 22, cannot speak
highly enough of the TV show. The Bury-
born entrepreneur left with £60,000 from
Theo Paphitis and Peter Jones for 40 per
cent of Primal Parking, a business
that allowed people to rent out
their unused parking spaces.
Thousands of users flooded
the website after the broad-
cast, although talks with advisers led to him
selling the business without the investment
going ahead. But Woods, who had agreed to
double the 20 per cent equity he offered, be-
lieves he left with something more valuable.
“Theo and Peter knew that by shaking
my hand on national TV would give me so
much credibility,” says Woods, who was in
his second year at university. “Looking back
I don’t believe I was really ready to go into it
and I think they knew that I needed to focus
on university, but they knew how beneficial
their backing could be to me.”
Woods is now co-owner and managing
director of YourParkingSpace and has
grown the business from generating
£1,500 per month to £150,000
per month in a year. Now based
in Canary Wharf, London, lead-
ing a team of 16 and following
an acquisition in Bristol, he
says: “I’d attribute all that to
Peter and Theo’s encouragement.
People who come out with a negative
experience are quite naïve. They have to
make a snap decision on a show, whereas
there would usually be six months of due
diligence.”
MOUNTAINTRIKE
Tim Morgan made his pitch in 2013, asking
for £100,000 in exchange for five per cent of
his business Mountain Trike, which designs
and manufactures all-terrain wheelchairs.
The Nantwich-based downhill mountain
bike racer came up with the idea while at
Bath University, after witnessing the injuries
“THEOAND
PETERKNEWTHAT
SHAKINGMYHAND
WOULDGIVEME
CREDIBILITY.”
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3. www.northwestbusinessinsider.com6 insider MAY 2015
THE BIG QUESTION
incurred by those taking part in the sport,
and was described as “incredibly inspiring”
by Dragon Kelly Hoppen.
He was offered the full amount in
exchange for 15 per cent of the business
from Deborah Meaden, but said he could
not budge on the five per cent due to the
involvement of others in the business. His
£2m valuation was branded “bordering on
the delusional”.
Morgan says: “I was in there for more than
two hours so it was pretty draining, but they
were all very positive about the product. A
lot of the people you see will be looking for
investment to get off the ground. We’d been
on the market for three years and I’d already
diluted my share to get to that point, so I
didn’t have a huge share to give away.”
Though he didn’t walk away with the cash,
the impact of being on the show was clear.
“On the night of the show we had more than
3,000 hits on the website, we normally got
that in a month,” he says. “It would have been
fantastic to get a Dragon on board but I had
to stick to my guns.”
Morgan is working on adapting the
trike for people with limited finger grip, for
example those with spinal injuries. “We have
something pretty unique in this industry, we
sell 100 a year which, for a small team of five
of us, is pretty impressive,” he adds. “We’re
just cracking into the US as well, and we’re
seeing a good increase in sales.”
GARDENGOPHER
On the Wirral, Rachel Price managed to sell
her entire stock of 600 products within six
weeks of her three-and-a-half hours in the
den in 2007, pitching her Garden Gopher
trolley after being approached by researchers
Price, who is now marketing manager for
Wirral vehicle loader and conveyer manufac-
turer Sovex, says: “It gave me the exposure
I needed, it was just a shame how it ended.”
REDFOOTSHOES
Tim Smith, based in Rossendale, had the dis-
tinction of asking for what would have been
the largest investment in the show’s history
in 2011. Pitching for £300,000 in exchange
for 10 per cent of Redfoot Shoes, Smith was
praised for his “first-class pitch” and “brilliant-
ly made” products, which included foldable
ladies’ shoes and boots. But the Dragons
refused to make him an offer, because the
business was part of a group, saying this
made the ownership too complicated.
Taken to Pinewood Studios, where the
show was then filmed, at 5am on a Thursday,
it was 6.30pm the following day when Smith
finally got his two-and-a-half hour grilling.
“Peter Jones did make me an offer, which
they didn’t show on TV, but it was for 50 per
cent of the business,” says Smith.
“It was nerve-wracking but it’s a TV
programme and they want people to watch
it. As long as you know your numbers and
products and have researched it well, these
people are the ones to help you. I think the
Dragons missed a big opportunity, though.
We’ve had fantastic growth since the show
and profits are strong.”
Redfoot Shoes, which sells through House
of Fraser and Irish retailer Avoca, has a turn-
over of £4.1m and includes the subsidiary
Goodwin Smith. It launched in 2013 to offer
classic men’s footwear with a modern twist.
The shoes featured on the show sold well
“for the novelty factor”, but copied versions
have driven the price down, he adds.
“We turned over £140,000 in 2007 and our
projected figure for this year is £5.8m,” Smith
says. The business has also been approved
on crowdfunding site CrowdCube and will be
asking for £400,000 for stock and marketing.
following funding from the Merseyside
Special Investment Fund.
With orders from B&Q, sales through
garden centres and talks with Sainsbury’s
and Woolworths, several of the Dragons were
unsure why their £150,000 for 15 per cent of
the business was needed. While they were
impressed with her product and success so
far, her revelation that the business had debts
of £220,000 and her valuation of the compa-
ny only led to an offer for the full amount for
50 per cent of the business.
Price, who left with nothing, says: “You get
no editing rights, but I was happy with how it
came across and I don’t regret not taking the
offer. I think once you’ve been on it you don’t
worry about presenting to anybody anymore,
because nothing can be as bad as going in
front of the Dragons.”
As it happened, investment from a Dragon
would have been fruitless as Price experi-
enced problems with her Chinese manufactur-
er and the Garden Gopher business ended.
“ITWOULD
HAVEBEEN
FANTASTIC,BUT
IHADTOSTICK
TOMYGUNS.”
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