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Entrepreneurs, growth & investment

Episode 3 of Dragon's Den/ The Apprentice

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INSIGHTS

Welcome to our weekly Dragons’ Den and Apprentice blog, where a member of Harper Macleod’s entrepreneurial team will share their view of the latest episodes, give some professional insight to explain how we could have helped … and hopefully have a bit of fun along the way.  This blog is from Solicitor, Rachel Miele who works within the entrepreneurial team.  The team have been involved in almost 200 transactions with a total deal value of more than £147m in the past three years, many of these being equity investments.

Week 3 of Dragons’ Den arrived with 5 new teams pitching for funding from the Dragons’. First up was Camp Wildfire marketed as a summer camp for adults with “adventure by day, and party by night”. First impressions were positive, with Sara declaring that she’d love to go to such an event. However, the company fell at the financial inquisition. An unfortunately common theme in the Den. They managed to navigate the queries around annual losses, winning holiday park expert Deborah over with their environmentally friendly adult camp, and she offered them their full ask of £75k but for 25% of their company – 20% more than they asked for. She mentioned structural problems and concerns over the magnitude of organising and growing this type of events business as reasoning for upping the percentage taken. In a total turnaround however, Deborah revoked her offer completely following their attempt to negotiate an investment where, if the business met its financial projections, Deborah would strip back her ownership to 5%… In the words of Deborah “I nearly fell off my chair”. An unfortunate end for the business, and a lesson in why “claw back” doesn’t always work. See last week’s blog by Angela Gizzi where a previous pitch managed to balance this kind of proposal.

Next up was the all-female team at Frida Rome who specialise in vegan handbags with a twist. The twist being a chapter of an erotic novel is sewn into the inside of each bag! Fun, creative and planet friendly – as a viewer I thought they would have the Dragons’ fighting over who gets to invest. However, the majority of the Den couldn’t get on board with the concept. New Dragon Steven Bartlett understood their vision and how he could establish a cult following through clever marketing. They left with Steven taking a 20% stake in their business for £50k. A lesson in finding the right investor fit for your company.

Pitch 3 was a short and sweet appearance by upside down house – a Camera Obscura type attraction (hyper local Edinburgh reference here) – but with only one photo opportunity and charging £10 per customer. The Dragons’ couldn’t see the opportunity in this, and declined the offer of a 5% stake for £160k.

Up next was Zak Lloyd and Aaron Branch with their home-delivery service app DelivrMe. A massive red flag again was the financial projections in their business plan. Their proposed cash burn was a staggering £15m to roll out the app. Whilst the idea was good, it also wasn’t anything new and they couldn’t convince the Dragons’ to get on board. It poses the question that a lot of early stage companies should ask themselves: what problem are we trying to solve?

The final pitch came from husband and wife team Karen and Andy Turner with their prepared and measured range of soups, stews and baked goods. The idea is you empty the “tube” of ingredients into a pot, add water and off you go. Kandy Kitchen Creations started as a kitchen table business, successfully growing year on year since 2017. The Den loved it and they managed to gather a split investment from three Dragons’ totalling £50k for a third of their business. An initial concern for this product would be the design, one way to prevent other companies from copying the look and feel of their product would be to register the design. IP is a valuable asset, so as your business grows, you don’t want this to be forgotten allowing other companies to easily replicate and piggyback on your success.

This week also brought the first “mixed teams” over at the Apprentice. After a disappointing run, it would mean some of the boys finally got to experience being on the winning side. The challenge was to create a non-alcoholic drink with its own social media aspect (for example, a QR code or selfie filter). As usual, a lot of ideas in the mix led to substandard execution left a bitter taste, leaving sales figures to determine the winner. Team Diverse clinched it with an order of over 10,000 cases of their non-alcoholic “vodka soda” versus the order of 2,502 achieved by Team Infinity for their craft “beer”. It’s okay, I’m cringing at the team names too…

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CONTACT US

Get in touch

Call us for free on 0330 159 5555 or complete our online form below to submit your enquiry or arrange a call back.