Anglais, Dragons Den

Dragons Den is a British reality TV show about business. Entrepreneurs, who are seeking funding, pitch their business ideas to five investors. The latter referred as “dragons” are multi-millionaire looking for investment.  

During pitches, candidates pre-deal by telling a specific amount they want to get in exchange of a percentage of their business. The pitch has to be short (2 minutes) and has to reach investors’ interest by persuading them that their ideas are profitable and viable in long term.

In this episode, the den consists of five dragons, including Peter Jones, Deborah Meaden, Touker Suleyman and two news dragons Jenny Campbell and Tei Lalvani.

Liam Sherriff and Craig Newbigin from County Durham aim to enter the nutritional market with their supplements business Natural Nutriments.  A start-up which offers high quality natural supplement’s products. Their main targets as investors are Peter Jones and Tej Lalvani. They have received interest from Europe’s largest and leading health food retailer to launch their products in 270 stores.

Though their pitch, they look for £100,000 in exchange for 10% equity. Their brand relies on two values, the quality and the transparency of their products. Their activity is divided into three segments: general health, super foods and snacking.  

On the discovering part, dragons are willing to know more about the project and the duo.

Firstly, the duo enlightens Jenny Campbell about their target market. For them, there is an opening market which target customers are people who use the gym and want healthy and natural products. Due to financial barriers, Peter Jones is uncertain about their abilities to entry the market. They point the fact that their latest round of investment allowed them to pitch to Holland & Barrett, the largest vitamins’ supplier, while touring at trade shows, which lead them to launch their products in Holland & Barett’s stores.

Tej Lalvani highlights the poor margin of the product. Indeed, the product cost them £14 and they sell it for £16.50, which made a margin of £2.50 (a margin rate of 1.2%). It raises serious doubts about the company’s potential to make a profit.

Concerning their financial track record, they took out a £125,000 convertible investment loan mostly use to set a shop in year one. The figures of last year show £72,000 turnovers, a gross profit of £26,500, and a loss of £64,000 as investments for the structure, infrastructure and new product development.

The £125,000 is a “proof of concept” loan provided by the European Union and the government. According to the terms, Natural Nutriments will be expected to negotiate equity shareholding or re-pay the loan in less than two years. They intend to pay the loan monthly with a forecast profit of £36,500. After reading the agreement, Peter Jones sees that it contains a redemption premium of £100,000 which is enormous and represents 80% of the loan. It results a £100,000 debt for their company.

Among the five dragons, Touker Suleyman is the first dragon to be out, for the reason that the project doesn’t worth £100,000,000. While the atmosphere tends to think that they will leave with nothing, the situation leads instead in a trend-reversal.

Deborah Meaden is convinced that this is a growth market. Thus, she offers half the money for 20% of the business in condition they negotiate to drop out the penalty. On the other hand, Peter Jones offers all the money for 40% of the business and is open to share with over dragons. Jenny Campbell makes an offer for half the money for 17.5%. Regarding Tej lalvan, he is prepared to offer half the money for 20%.

Unexpectedly, four options are proposed to them including their two investors’ target. Although, Tej doesn’t want to lower his equity, Liam finds a deal between Peter Jones and Tej lalvan In order to keep 51% of the business. Each of them provides £50,000 for 17.5% of the business with the condition that they negotiate the debt.

...