British TV: Dragons’ Den (Part 2)

Welcome back to LEP. This is part 2 of this mini series I’mgoing to do about BBC Dragons’ Den, the TV show about entrepreneurs trying toraise finance for their business startups by going to meet the Dragons – agroup of 5 business angels looking to make money by investing in interestingnew business propositions.

In part 1 of this I did a long business ramble all about thedifferent factors and considerations involved in an entrepreneur attempting todo an investment deal with a private equity investor. That covered loads ofvocabulary relating to loads of different areas of business and laid the groundwork for this episode in which we are going to use a real pitch from an episodeof Dragons’ Den as a case study from which we can learn loads of English.

Also, the story of this particular investment isparticularly interesting and the negotiation takes an unexpected turn whichcreates more emotional drama than you might expect from a business meeting.

So, at the end of part 1 we listened to Kirsty Henshaw’soriginal pitch. Let’s listen to that again and break it down for language.After that we’ll listen to the rest of the meeting in bits. We’ll listen andthen listen again and break it all down.

This should be a really good one! I hope you’re listeningcarefully. We might be able to get all of this done in this episode, we willsee. There are other Dragons’ Den pitches that I’d like to do too so I mightadd another episode with some other pitches as well. So perhaps this will be a3 or 4 part series.

Right, so let’s listen to Kirsty Henshaw again and remembermy questions from before.

How much investment does she need? £65,000

What equity stake is she offering in return? 15%

What exactly is the product? A healthy alternative toice-cream – a frozen dessert (free from dairy, sugar, soya, nuts – everything!But what’s actually in it?)

Why does she need the investment? To buy stock, raise brandawareness with marketing and PR

Would you like to invest?

What questions would you like to ask next?

Kirsty’s pitch begins at 44:00

Peter Jones

It tastes more like frozen yoghurt. Is that fair?

– She wanted a healthy option,similar to ice cream but there’s no dairy that’s why it’s a frozen desert.

How much has it cost so far?

– £20,000

How many have you sold?

– 2,500 units

– Went to a big meeting with a largesupermarket – it’s completely unique, some of the staff had heard about itbefore

Do you have any forecasts in the first year?

– 300,000 units – starting to getinto bigger places now

Duncan Bannatyne

How healthy is it? How much fat is in it?

– Less than 3% fat in all of them,no sugar in any, carbohydrates are from fruit extracts, a good form of sugar

James Caan

What are the ingredients?

Brown rice milk (because soya isn’t great for children andrice milk is a good digestive enzyme), the fat is organic virgin coconut oil,sweetened with extract of apple, carob and grape.

Deborah Meaden

How far are you down the track with the supermarket?

– Min 400 stores from Sept when theydo their refresh

Are they committed?

– At least 350-400 stores to trialit

Theo Paphetis

Which supermarket is it?

– Tesco

They must have asked you whether you could produce in theright volume?

– Yes

What did you say?

– I said yes because I’ve spoken tothe manager of the biggest ice cream manufacturers and they can make it noproblem, if we get the order (volume – numbers)

James Caan

Do you have any idea what Tesco’s potentially could order?

– At least four flavours for eachstore to start with

How many in a case?

– 12

If they sold one case per week per store, that’s 400 cases.How much do you make per unit?

– Just over one pound

So 4,000 per week is what you’d make. That’s 200,000 a year.

– Not including my current suppliers

What did you forecast your profit in year one?

– £300,000

So that forecast is not a million miles out. There’s somesubstance around it.

What’s your background?

Uni (sports science), but had to leave because mind was onthe business

Theo

Who is Worhingshaw’s?

– Mix of boyfriend and her name – tomake it sound like it had been around for a while

Have you really done all this on your own?

– Yes

How do you invest the money in this?

– 2 jobs and a bit of a night job,and my little boy

You’re pretty amazing aren’t you?

– No, not really.

[She starts crying]

This has been really tough for you hasn’t it?

– I just do it all for my littleboy. I just want him to have a good life.

I’ve got to be honest with you. I’m finding it really reallydifficult to actually take on board what you’ve achieved. It’s phenomenal. I’mtotally blown away by it. I’m going to make you an offer. You’ve come in hereasking for 60,000 for 15% but I want 40%.

And I’ll explain to you why. Because I’m not going to giveyou 60,000, I’m giving you 100,000 because that’s what I believe you need tomake this business successful.

Deborah Meaden

Let me tell you where I am. I think you’ve done a great jobagainst all odds, but here’s my blunt and honest truth to you. I’m not going tobeat Theo’s offer so I’m not going to waste my time making you one. Thank youvery much but I’m out.

Peter Jones

Where do you want to take it? You’d love to see this productin every shop. Reggae Reggae Sauce was a big success because of Levi Roots’whole story. You could be the frozen desert version of Levi Roots.

For that reason I’d like to make you an offer for the fullamount but I only want 25% of the company.

James Caan

Let me wish you every success but you’re not going to needmy offer so I’m out (there are already deals on the table).

Duncan Bannatyne

I’ll match Peter’s offer (£60,000 for 25%)

Kirsty

I don’t want to give 40% away but thank you for your offerTheo.

I’m really confused now because I know you’re bothbrilliant.

You’re both ideal to help me, so I don’t really know what todo now.

Peter

If we raised it to 30% so we got 15% each, I’m more thanhappy to work with Duncan if that’s something he would accept (yes).

Kirsty

I’d really like to work with both of you. It would be idealso thank you very much I’d really like to accept your offers.

That’s it!

What do you think? Would you like some more Dragons’ Den onthe podcast?

Let me know your thoughts in the comment section.