Do the investment deals ever really work?
Men born in 1978 or 1979 – Have you sent a thank-you note to Peter Jones yet? He still hasn’t revealed why this is only available to them
Peter Jones has found another diamond in the rough!
Just a TV show (albeit one with a bit of bite) or a great way for entrepreneurs to try and get investment? We take a look at some of the companies that were brave enough to pitch their ideas on Dragons’ Den – and whether the deals really worked out in their favour
It was an unlikely television hit. A bunch of entrepreneurs pitching ideas to a panel of successful business people in the hope of securing financial backing. But BBC2’s Dragons’ Den produced moments of pure TV gold and quickly amassed a cult following.
Peter Jones, chairman and CEO of Phones International Group and one of the ‘dragons’, saw the impact of the programme during a recent trip to Manchester where, he says, school children were being set homework based on the show. “It has cult status because it touches the heart of entrepreneurial spirit in Britain,” says Jones.
Since its focus is on entrepreneurs, it deals with the quirky and the downright eccentric. There was the father who came up with knee roller-skates because men spend much more time at home with children-on their hands and knees. He failed to squeeze any cash out of the dragons. Then there was the woman whose taxi-based board game was pooh-poohed by the panel, only to go on and become a bestseller at Hamleys.
“When the BBC first came to me to discuss what the show was about and the fact it was business-oriented, it was an instant ‘yes’,” says Jones. “I am a businessman not an entertainer.” He believes Dragons’ Den offers valuable lessons on how to pitch an idea. “You have to describe quickly and be concise,” says Jones. “You learn what to say, how to say it, how to look and how to present.” And most important, believes Jones, is learning just how tough all of that is.
“If you compare it to real life, it is very representative of the nerves and preparation you would undertake before going to investors,” he says.
All the dragons-who last season included Doug Richard, Duncan Bannatyne, Rachel Elnaugh, Theo Paphitis and Jones-look for different things. For Jones, first impressions matter. “If it is not good, I am not saying they will always get a ‘no’ from me, but it gives away the first tick in the box.” If anything, he adds, he is softer on the show: “I am quite kind to people, since if they turned up at my office looking like they’d been dragged through a bush backwards, [with] a stupid idea and were clearly wasting my time, it wouldn’t take me as long to get rid of them.”
An enthusiastic dragon, Jones has already backed several entrepreneurs, as well as working with Paphitis to salvage Rachel Elnaugh’s Red Letter Days-proof, indeed, that even successful ventures can fail. “Business failure is never easy, especially if you happen to be in the public eye,” says Jones. “Having said that, Rachel isn’t on TV anymore giving advice or critiquing ideas.”
Despite having the power to shatter people’s dreams, Jones maintains that it’s just a TV show-albeit one with a bit of bite. “I don’t lose sleep, but neither do I just give money and let them run with it,” he says. “If a business fails, at least I know we will have done everything we could.” Would the entrepreneurs agree? We find out whether having a dragon investor has been everything they expected.
1. The deal that fell through
Sector Consumer goods
Who Charles Ejogo
An umbrella vending machine is one of those simple ideas that makes you wonder how nobody thought of it before. Charles Ejogo, who appeared on the first series of Dragons’ Den, is on his way to cleaning up the market with Umbrolly, which sells £2 umbrellas to commuters. By the end of the year there should be at least 700 Umbrolly vending machines in place.
“I went on the programme to see what seasoned business people thought about my business concept,” says Ejogo. He was looking for £150,000 and got agreement for that investment from Peter Jones and Duncan Bannatyne. But the deal fell through due to a combination of reasons. The main stumbling block was that the Dragons wanted to use the vending machines to advertise but, for Ejogo, most important thing was to win the contract to put the vending machines on the London Underground first.
Ejogo was also concerned that the Dragons wanted a hefty 42 per cent of his business. Without the investment, Ejogo still owns more than half the equity in Umbrolly.
The programme was a great launch pad for the idea. He got good advice from Jones and the exposure he had was worth more than the cash. “As soon as the programme went on air, people were interested in the business-to a degree due to the TV exposure, but also because the Dragons’ interest lent credibility,” he says. Crucially, it helped get the attention of the banks and the business is now funded by a combination of invoice finance and asset finance.
Some 18 months down the line, Umbrolly machines have made their way into other countries including Ireland and Australia.
Ejogo says Umbrolly is now in a position to roll out rapidly because the team has spent so much time putting deals in place. And what of competition? Ejogo says there is a company that is trying to muscle in on the market, but that they must first go through all the teething problems he had.
The biggest part of his learning curve was to recognise the need to make a mini version of the vending machine. “That is why we spent so much time getting people signed up,” he says. “We didn’t leave a lot else out there for competitors.”
2. The deal that went wrong
Company Truly Madly Baby
Sector Internet and party retail
Who Julie White
When Julie White appeared on Dragons’ Den last November she emerged as one of the lucky ones: Peter Jones agreed to invest £75,000 in Truly Madly Baby the baby retailer she set up after the birth of her son.
“The vision was to grow in terms of consultants, create a website and put together a catalogue,” says White. “We asked for £75,000-though any entrepreneur will tell you the figure you come up with is never enough because there are other things to do. But it was a starting point.”
Although White won an agreement for funding from Jones last summer (when Dragons’ Den was filmed) it has yet to be finalised. When Jones expressed his interest in her pitch White says: “I felt like we had won the lottery. Unfortunately, what followed was an anti-climax because there was a long time between filming and speaking to Peter Jones.”