They say Lightening never strikes twice, so what chance that Duncan Bannatyne would invest two weeks in a row? Well, Ladbrokes were offering odds of 100/1 at one point until there was a flurry of bets from somewhere in Stockton-on-Tees…

We were treated to a bit of a song and dance from our first potential investee this week, Sid Sims and his “Back to the Movies” stage show. Sid was looking for a £50,000 investment for a 25% share (I don’t believe it – a reasonable valuation!). Sid’s big idea was to take the “holiday camp show” format, and take it into proper theatres and charge £18 a ticket.

As the owner of a chain of such holiday parks, Deborah Meaden could spot the obvious flaw with the “business” – at a holiday park, people watch the entertainment becasue they are a captive audience – it’s a no brainer. Going to watch a show for free because there’s very little else to do is very different to choosing to pay £18 to go to the theatre when you could do anything at all.

James Caan picked holes in his marketing strategy (such as thinking that a £25,000 marketing budget was sufficient to sell out a minimum of 80 theatres all across the country), and it was clear that the numbers just didn’t add up, and the dragons were soon muttering “I’m out”.

Ian Helmore sauntered up the stairs next, looking for £145,000 for a 10% stake in his rather clever shower system to help prevent legionnaires disease, Steri-Spray. Duncan was very quick to slate the invention (his face about 5 mins later suggested he was maybe a little too quick to make his mind up) and declared himself out.

James and Peter tried to establish the numbers, but it was clear that Ian was an Inventor, not a businessman – He clearly lacked the business sense to take this product forward on his own. He claimed to have a 77% margin, compared to the standard 25% for the Industry, and when Peter asked why he didn’t just reduce the price to be the same as the other showerheads that don’t save lives, and take the entire market, Ian simply replied “I’ve never thought of it”.

Ian was clearly frustrating the dragons with his fluffy grip on the figures, and was just about to lose them when he pulled the proverbial rabbit out of the hat… Deborah asked who his main competitor was. He pulled out their showerhead, that sells for £60 and is disposable (His is £250, but permanent), and declared that there were 1.5 million of the disposable showerheads in hospitals across the UK right now. You could almost see the pound signs rolling in the dragons eyes when he said that (apart from Duncan who looked sick as a dog).

There was an uneasy silence as the dragons didn’t want to reveal their hands too quickly. Finally, Deborah offered Ian the full £145,000, but for a 40% stake. Peter and James backed out as they didn’t want to undercut Deborah, and Theo offered to split the investment with Deborah if that would help persuade Ian that it would give him twice the much-needed business acumen. Thankfully, he agreed and I feel this could be one of the best investments ever seen on the den, if they can get into the NHS budgets.

The “quickies” this week included Coin-Operated diggers, upmarket food and drink parties, swamp soccer (playing football in a swamp.. I actually think there’s a hell of a market for this in end of season parties, stag weekends, etc), a training company run by a very loud geordie, and a moving wrist-rest for your mouse (way to over-solve a problem).

We then had some classic Den Gold… This is one that will be shown as the “How not to..” perfect example for years to come. Susanne Chisty, a former Investment Banker was hoping (some might say dreaming) for a £175,000 invesment in return for a 10% in “Yes! SuperBaby!” (Yes, that’s really what it’s called), a range of clothes that help stimulate babies minds.

Aside from the fact that the products themselves looked hideous, Susanne clearly had grasp of numbers whatsoever, and was not listening to a word the dragons were saying. In her first year of trading, she managed to sell a grand total of 136 products, for a gross turnover of just £1,600.

It was left to James Caan to ask the obvious question: “As a former Invesment Banker, how do you go from selling £1,600 of stock to valuing your business at £1.75 Million?” – Her answer was that someone else (also an Investment Banker) came up with the valuation.

There then followed some interesting conversations where the dragons were looking for their amusing ways to declare themselves out…

Theo: “This opportunity is as exciting as a 2 week holiday in Afghanistan.”

Susanne: “Yes.”

Theo: “Yes??”

Duncan: “No one in their right mind would wear this. It’s ludicrous”

Susanne: “Yes.”

Duncan: “Yes??”

Not entirely surprisingly, all dragons were out. Which moved us onto the final couple of the show. Now remember, BBC Rules dictate that the final entrepreneurs shown on each episode must get the investment they’re looking for, or people will switch off.

Step up Mark and Elina Davis, who were looking for £100,000 for 20% of their Caribbean Ready Meals business, Phillips Foods. They started off by handing each of the dragons a sample of their food, which they all seemed to enjoy.

They were clearly nervous to begin with, but once they got into their stride, it was starting to become clear that they had a rather successful product on their hands. They already had deals in place with ASDA and Morrisons, and in their first 8 months of trading, they had already turned over more than £500,000. Even more amazingly (and this is where it started to go wrong), they claimed that the full year turnover would be “around £2,000,000″ – When asked to clarify that they expected a further £1.5m in turnover in the next 4 months, they stumbled more than a bit.

The dragons then drilled down the financials further, and it was established that out of the £1.60 price they were selling for wholesale, they were paying £1.30 to the manufacturers, around 8p for the container, 10p for the cardboard sleeve, and around 12p for delivery. It therefore doesn’t take a genius to work out that they’re not actually making any money, and the old saying “Turnover is vanity, profit is sanity” has never been truer.

It was unfortunate on the couple, who were clearly really nice people. Theo, Deborah and Peter all declared themselves out in the nicest possible way, whilst offering them some very useful advice. It looked as if someone was going to break the cardinal rule of the Den and let the final pitch of the show leave empty handed.

Fear not, however as serial-investor Duncan Bannatyne has yet to declare! And we all know he’s one of the top investors on the den… oh.

As well as Duncan, James Caan was also yet to show his hand, and when he did, it contained a wildcard. He could clearly see the potential in the product if only they could sort out the cost of manufacturing. Well what do you know? James revealed that he knows the industry very well, and his sister and close friend are involved in a similar Indian ready meals business, so of course they can sort out the manufacturing costs. He then proceeded to offer them the full £100,000, but for a 50% stake.

Not wanting to be out-done, and now he’s remembered what to do on an Invesment show, Duncan had a wild-card of his own… He had previously invested in a refrigerated distribution company called Igloo distribution on Dragons De, which could of course further reduce the cost of production. He then made Mark and Elina two offers: The full £100,000 for 50%, or split it with James, £50k for 25%. Not surprisingly, they were more than happy to accept.

This is the perfect example of a good business, with some major problems. The introduction of Duncan and James should almost immediately eradicate those problems, and they should have a ready-made (sorry!) success story on their hands.

One interesting thing after Mark and Elina has disappeared back down the stairs.. Peter Jones said “All I can say is good luck Duncan” – Is there some spat between Peter and James, or am i reading too much into that comment?

Just time for a quick look at the updated Investment League Table:

1. Theo Paphitis: 4 investments, £397,500
2. Peter Jones: 4 investments, £300,000
3. Deborah Meaden: 4 investments, £182,500
4. James Caan: 3 investments, £160,000
5. Duncan Bannatyne: 2 investments, £100,000

No change to any of the placings after this episode – Peter Jones was the only dragon not to invest, thus winning the “Duncan of the week” award, and meaning Theo extends his lead at the top. Deborah’s closing in on second place, but with only three episodes left, is there enough time for her to catch Peter, or will James overtake her?

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