Welcome to our weekly Dragons Den blog where a member of Harper Macleod's entrepreneurial team will share their view of the latest episode, give some hints and tips and also explain how we could have helped … and hopefully have a bit of fun along the way. Following Jo Nisbet's blog on Why face value is no measure of a good investment, this week's blog is by Anisha Kaura, a solicitor in our entrepreneurial team who specialises in advising start ups and high growth companies. She's part of a team that has completed more than 90 equity deals in the last three years.
Standing out from the skin crowd
Wellness entrepreneur Hanna Sillitoe entered the Den looking for £60,000 in return for a 10% stake in her ethically friendly skincare business. With a self-assured pitch, she impressed the Dragons from the get-go and revealed how she developed her products off the back of her own personal struggle with acne, eczema and psoriasis. Looking to revolutionise the skincare market, Hanna's business offers natural skincare treatments, healthy recipes and health retreats. However, one of the issues the Dragons had with Hanna's business was its lack of strong branding. Deborah Meaden commented on the necessity for the brand to evolve if it is to stand out from the skincare crowd.
Why is a brand so important? Branding is a method of differentiating yourself from your competitors, making an impression on customers and convincing customers that you are the better choice. Brand awareness and recognition are vital for any business, especially if your goal is to become a 'household name'.
However, with the power of a brand also comes the need to protect so no-one else can take advantage of it. Every business should ensure that it has carried out the necessary steps to protect its brand, which can include trade marking a word or logo. As well as giving you the right to prevent others from capitalising on your brand it also gives you the potential to licence your brand in the future.
Despite a few setbacks on the branding front, with an impressive turnover (and Instagram following), Hannah managed to wow the Dragons and secured an offer from all five. She settled on a combined offer from Tej Lalwani and Peter Jones, with each of them investing £30,000 for a 10% share of the business.
Cyclist needed safety first approach
Next up was Darren Morris pitching his invention aimed at making roads a safer place for cyclists - Gloride. With claims that his bike light can make cyclists 10 times more visible to motorists, it sounded like an innovative product. Darren entered the Den looking for £100,000 in exchange for 20% of his business to allow him to take his product to market.
However, the product's lack of patentability was a concern for the Dragons, as they emphasised that any competitor could develop a similar product and take it to market within a few months. Darren wasn't thrown by this and believed that his brand would lure in customers as opposed to cheap knock-offs, but it wasn't enough for the Dragons. The lack of protection proved too much of a risk and Darren left the Den without an offer.
This is a key reminder of the importance investors place on key intellectual property being in place. A patent protects inventions from being copied or used without the inventor's permission, but you can only apply for one if your product meets the following requirements: new, inventive and original. You should ensure that your product is patentable or, if not, that you have a strong brand to fall back on. Without intellectual property protection, it is very difficult to prevent competitors from developing similar products or using similar branding.
Top secret sauce
Finally, into the Den came Will Chew of MakTok, a chilli paste connoisseur who serenaded the dragons with his singing and positivity. Taking his Mum's hot sauce recipe that he cooked during his time at university, Will eventually started his own business. He impressed the Dragons with his sales of over 8000 units, landing a contract with a UK supermarket and securing contracts with multiple EU countries.
Will was able to protect his business via a trade secret, which has no expiry date (unlike patents, trade marks, designs and copyright). With trade secrets, the relevant legal document required is a non-disclosure agreement. You should give information on any trade secrets to less than a handful of people and if necessary, ensure you have non-disclosure agreements in place in the event of a breach.
In a touching (and often unseen) moment on the show, Will revealed his struggle with social anxiety which struck a chord with an emotional Sara Davies who decided to go with her heart and make an offer to the young sauce maker. Sara proved here that it's not always just the product or services that investors invest in, but sometimes it's the person themselves.
Get in touch
Please get in touch if any of the issues discussed above are things that you might need to take advice on.