First of all, apologies for the lateness of this DD update. After spending all of last week in London Town for the A4uexpo, I didn’t get a chance to see episode two of the Den until last night. I knew it would be a good one, as the first thing everyone said when I met them throughout the week was “did you see Dragons Den on Monday?”

So my warm-up act for the final Sopranos episode (Oh my god, I can’t believe they did that!) last night was James, Richard, Theo, Deborah and Peter (Not forgetting of course Evan and the intrepid entrepreneurs)

First up was graphic designer Sarah Lu , who wanted £35,000 for a 20% stake in her company youdoo dolls, making fully customisable dolls. Although she did come across as rather amateurish, it was clear that she was making money and selling dolls. I think she said she had sold £6,000 worth in 3 weeks? That’s pretty good for a back-bedroom company.

She received offers from Deborah (£35,000 for 45%) and James (£35,000 for 40%), both of which I felt were asking for too much equity. I feel Sarah was fairly realistic about her valuation whilst leaving room for negotiation. 35% would value her company at around £100,000, which I think is a fair value and worth a punt at that money.

As it was she accepted Deborah’s offer of 45% which shocked me – Aside from the fact I could never see anyone getting on with her, I don’t think she really brings anything else to the table for this sort of business over James Caan. I’d have politely declined both offers and carried on making decent money myself I think.

Next up the stairs was Chris Mayo, a teacher looking for £100,000 for 10% of her company (Why do

they always give themselves a “valuation” of a million?) Sweet Counter, selling educational toys. Now I’ve a bit of experience in this sector, having owned an educational toys business for a couple of years and also being married to a teacher!

From the edited version of the program (I have to say that after getting complaints/excuses from one of the participants last week), it appears that Chris made the mistake of talking far too much, and confusing the dragons – She was talking in “teacher-speak” which meant that myself and Er Indoors knew exactly what she was saying, but the dragons didn’t have a clue what she did, or how she made money.

The main problems she faced were not having unique enough products to satisfy copyright laws, and no-where near enough sales to predict any sort of Return on Investment. The company was barely making enough money to pay her. The education toys and resource market is a tough one to crack, and it’s for that reason that I sold up that particular business just over a year ago.

Of course there’s always a little bit of “TV Gold” when the entrepreneurs mess up, and the dragons ripped her to shreds causing her to forget the question that had been asked of her. This was the final nail in her coffin, and everyone pronounced themselves out.

We were then treated to a quick succession of weird and wonderful products, including a golf Swing tool, pint-glass lids, a kebab maker, pants with pockets, bat poo (yes really – bat poo), and a “foldaway ironing board” – all of whom thought they had the best thing since sliced bread, but were very quickly shown the door (Or the stairs to be more precise.. they should have a trap-door for all the really useless ones)

Next to attract the dragons attention was a guy who looked to me to be the spitting image of Steve Carell. He was looking for £200,000 for a 20% stake (Oh look, it’s the magic million valuation again) in his company which he explained as a “toilet-training device” but which I would describe as a ping-pong ball with a smiley face drawn on.

In fairness, it was a very good presentation indeed, and the figures certainly seemed to stack up (estimated FY profits of £100k on turnover of c£500k) – At £3.59 for a pack of 4, it’s a reasonable price, and a nice margin.

James Caan offered up half the money (£100,000) for a 25% stake, but could not pursuade any of the other dragons to go in with him. Peter Jones had it spot on I think when he said that “Steve” was brilliant, and very investable as a person, but he simply did not believe in the product.

After such a brilliant pitch, “Steve” then made a critical schoolboy error by going back to James and only offering him a further 5% stake for the remaining £100,000. He should have known he’d want at least a 50% stake to invest at that level (I’d want a controlling stake for that much) and to only offer 5% was insulting to James Cann I think.

It’ll certainly be interesting to see how he gets on in the future, as even though I don’t believe in the product, many others seem to, and with his drive and passion, he could be one of the major success stories.

The final couple up the stairs were Emmy Matthews and Ed Stevens from Affiliate site Gaming Alerts. They were looking for £200,000 for a 10% stake (take the magic million and double it!) in their company. They run a few comparison sites for Bingo, Poker, Casino, and Bookmakers.The most amazing thing I noticed about their pitch was how little the dragons understand about Internet Marketing. Duncan Bannatyne refused to accept that people actually play bingo online. As the owner of an online bingo site, I can assure Duncan that they most certainly do! And I’d be more than happy to have Theo’s wife on board, as he says that she plays every night!

Their estimated profits of £1,000,000 were very much exaggerated I felt, but knowing the Industry they certainly are achievable within a few years of re-investment. The issue I have is that I don’t believe they really needed the £200k to progress the company , and I think they massively over-valued the company.

In its present state, the company is worth no more than £250-300,000, so for £200k, I’d be looking for around 65-70% of the equity, which of course, I’d expect them to turn down. Much better to ask for £50,000 for a 20% stake for example.

Unbelievably though, Theo decided they were worth investing at that price, and after they initially tried to get him to take 25%, they managed to rob him of the full £200,000 investment for just 30% of the company. Perhaps Theo knows how much Mrs P drops at bingo sites every night and decided it was worth getting some of that money back.

Either way, if he’s got money to throw away buying affiliate sites, he can have 30% of our Bingo Site (which is already more profitable than Gaming Alerts) for £200,000 any time he likes!

Next Den update will be nice and quick I promise – should be tomorrow afternoon!

If you enjoyed this post, make sure you subscribe to my RSS feed!

You might also like to read...

Dragons Den: Series 5, episode 9
A real change from the usual format this week, starting with my usual few minutes of the lovely Nigella Lawson cooking a nice bit of fish in.. urgh! it’s Rick bloomin Stein! Where’s Nigella gone? A large chunk of the…...

Dragons Den: Series 5, episode 8
First of all, my apologies for the lateness and brevity of this week’s update – It’s due to a combination of being really busy with the Christmas sales, a dose of Man-flu, and taking the night off to go to…...

Dragons Den: Series 5, episode 7
One of the benefits of Sky-plussing Dragons Den is that you get a few minutes of Nigella Lawson recorded at the beginning of each episode. Now whilst I’d never sit through a whole hour of her, a few minutes each…...

If you enjoyed this article, please consider submitting it to the readers of Affiliates4u so that they can enjoy it too! Just click the following button: