Legal Eagles & the Dragon's Den: entrepreneurs, are your deals exactly what you think they are?

Our high-growth and investment team has extensive experience helping young, innovative companies secure the necessary investment to fuel their growth. As legal partners of Entrepreneurial Spark, we're also well used to helping them be investor-ready in terms of facing a grilling when pitching for backing.

Each week, we outline how we would the help the businesses coming under fire from the Dragons deal with their potential pain points from a legal perspective.

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Episode 6 of Dragon's Den gave us four very different businesses with different styles of pitching and also differing routes to market.

Oomph – portable coffee maker | manufacturing contracts

This week's Den started with a coffee innovator that claimed to make the best and fastest coffee. The business "Oomph" successfully used reward-based crowdfunding platform Kickstarter to raise over £60k so it seems to be a product that, at least on paper, people are willing to buy.

One of the difficulties with the pitch was that the inventor did not seem to have a clear grasp of some of the basic numbers in his pitch which was disappointing. The other area that was disappointing was as regards the actual product itself, many of which appeared to have faulty lids.

Assuming that Oomph had properly documented its contractual arrangements with its manufacturer, it should have the ability to return the products to them. A properly drafted bespoke manufacturing agreement which contains minimum standards and quality expectations and what to do when these standards are not met is vital to any business in this type of sector. We could have advised on this to ensure that Oomph was protected as this type of issue can cause major problems. It is worth seeking legal advice on this at an early stage.

Corner – boxing technology business | intellectual property

Next up was Corner, a boxing technology business that had already raised £300k in equity investment during an earlier round. One of the main concerns that I had when watching this pitch was as regards ownership of intellectual property, which is a recurring issue from earlier episodes.

Peter Jones shared my view and specifically asked about who owned the intellectual property in both the hardware and the software. Not having your intellectual property protected is a common mistake for young businesses that use third parties and freelancers to help develop their product.

Dappad – online clothing company for men | trade marks

Third in to the Den was a Scandinavian woman with an e-commerce site aimed at males. The brand "Dappad" came from the idea that men liked to look dapper while shopping from their own pad ie. Home.

I got to thinking about how important the brand was to this business and with other competitors offering similar services, that brand is going to be vital to this company's growth going forward. So I hope this business has actively sought advice relating to trade marks, not only in the UK but further afield if the intention is to scale this business. We can help manage a worldwide trade mark portfolio for a client and assist them with their global ambitions.

Nannas Manners – cutlery for children | terms of investment

Last up was the husband and wife team behind Nannas Manners, a business which makes special cutlery to help young children learn how to use a knife and fork properly.

Intellectual property and branding issues were also raised as concerns during this pitch but I was also concerned about Dragon Touker Suleyman's request for one third of the business on the basis that he had "everything the business needed".

I hope that when it comes to documenting the investment that these additional services are included as part of the deal as this deal is more than simply about the money and that can often be overlooked. If an investor is promising to make introductions and open doors for an entrepreneur, make sure this is properly documented.

Get in touch

If you are a growth or scale business seeking investment or recognise any of the issues we've highlighted as potential concerns for you, please don't hesitate to contact a member of our team.