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Dragons Den UK S22E09

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00:00Hello my name is Anshu and I'm from East London. I've created a business that's around
00:21sustainability and health and I'm a sort of newly fledged entrepreneur as well. When I started the
00:29business my kids were both under the age of five and it is a juggle but my eldest daughter said
00:36the loveliest thing and she was like one day I want to be the boss of the business
00:41and I hope she is one day. I hope to make her proud.
00:48Hello dragons my name is Anshu and I'm the founder of Dabba Drop. Today I'm seeking
01:01£100,000 for 3% equity in the business. This is a dabba it means box in Hindi. These containers
01:10have kept the city of Mumbai my hometown fed for over a century. As you can see they're plastic
01:16free and reusable and show that convenience can coexist with sustainability. Back in 2018
01:23as a working mum I often ordered a takeaway as convenience but I was left feeling disappointed
01:29by the low quality food and the plastic waste that came with it and inspired by the Dabba
01:35system of my hometown I decided to create Dabba Drop. A closed loop subscription delivering wholesome
01:41ready to heat meals in the reusable tins. The tins go directly in the oven and in 30 minutes
01:48you have a zero prep dinner on your table and then you just swap out the empty tins for full
01:53ones on your next job and you get convenience and sustainability all in one. We currently deliver
02:01to London zones one to three. Each Dabba Drop has four different dishes, has two servings, it costs £30
02:09including delivery. So our vision for Dabba Drop is for it to be everywhere. First in the UK and then
02:17internationally. I hope you will join us on this journey and who wants to eat?
02:22A sustainable delivery service. Help yourself to Dabba. For oven ready meals in traditional Indian
02:35reusable tins is the offering from Anshu Ahuja. So they just unclasped from the side. That's clever.
02:45She's hoping for an investment of £100,000 in return for a 3% share of her company.
02:52That's our Punjabi menus. At the bottom you've got a chickpea curry and rice. Then you've got a
03:00saab and you've got cauliflower and potato in the top tin. The food appears to have hit the spot
03:07but will the dragons find the business proposition just as tasty?
03:17Anshu. Yes. Can I just relate to you what I understand to be your model and you tell
03:22me if I've got that right? Yes. So as a customer I pay £30. I have a Dabba delivered with the beautiful
03:29food in. Yeah. And when you dropped off the Dabba I would return the old one. Yeah. So you sign up for
03:35a subscription and you say whether you want it weekly or fortnightly. And so do people generally
03:43have this as like a Friday or a Saturday night takeaway or you're finding a lot of your customer
03:47base are having this as one of their midweek meals? Friday is still our busiest day but Wednesday is
03:53fast growing which shows us that you know as a midweek option this could be yeah quite a good thing.
04:00We don't currently deliver on Mondays. So £30 serves two people you buy it on subscription. Yes. Yeah.
04:05Can you give me an idea of the year over year sales and a view of profitability if you can? Yeah. So in
04:132021 we turned over £530,000 with a gross profit of £241,000 and a net profit of £75,000. And then in
04:272022 we turned over £630,000 with a gross profit of £245,000 and a net loss of £80,000. Yeah. So
04:40we turned over in 2023 £530,000 with a gross profit of £121,000. We had losses of £340,000. Okay.
04:52Which brings us to 2024. We had a turnover of £875,000 with a gross profit of £276,000 and
05:01losses of £76,000. So a loss of? £76,000. So we're now in a cash positive position for the last three
05:11months with between £7,000 to £4,000 net profit. Okay. I mean that's not amazing.
05:18What is holding this business back in terms of its growth in your view? Well we don't deliver London
05:27wide yet. We just delivered London zones one to three. Delivery costs are obviously sort of
05:35an expensive part of the business. But at scale those, you know, we really see the effects of
05:40economies of scale and we can negotiate better rates with our delivery suppliers. So once we're delivering
05:46further to more postcodes with more menus, we really believe this model could work. Okay.
05:52Andrew, I think you're... Hi, I'm Deborah. Hello.
05:55I think your problem actually sits in your margin because you were making near round about 50% margin
06:02and then you had a catastrophic drop off in 2023. Yeah.
06:06Can I ask you, who are your delivery partners?
06:09So we have a hybrid model. We have some of our own cyclists who deliver locally and then we work
06:14with Zedify and Xero. They're two cycle companies that deliver across London.
06:21So is there anything special about your delivery that says you couldn't roll it out to the big
06:26delivery, you know? Well the tins obviously, you know, with the likes of Delivery or Just Eat,
06:31you can't necessarily swap over the tins. Right. Okay. So there is, you've got an inbuilt
06:36issue around that. Yeah. Okay. So my biggest, I think, and probably for me the crucial question is,
06:42you had a collapse in margin in 2023 and you've only to date had a partial recovery.
06:49So you're still not back to your original margin level. Yeah.
06:52So can you explain to me, is this the level at which margins are now going to stay
06:57or do you have a plan to increase your margins? Well, absolutely. We will be trying to improve
07:03our margins before we take our concept, multi-city. So, and...
07:08So I'm going to home in on that because this is really important. This doesn't look
07:12good on your margins. I want to know why your margins improve going forward when the figures
07:17are telling me they actually took a downward turn and stayed there.
07:21Because we have much better control, we have a team in place that can deliver those margins
07:29and improve them. Also, I'm much more...
07:32Is food cost coming down, energy cost coming down? What is it?
07:36Yes. So food costs are in a much better place. So previously it was at 18%. It's now between 13 to 15%.
07:43Because we're delivering further and there are more deliveries, our delivery costs are between 14 to 15%.
07:50So yes, the costs are coming down. That's what I'm looking for.
07:53Yes. Okay.
07:56And to come, hearing what I've heard, your valuation is crazy.
08:03£3 million. Is that right?
08:04Yes. Or more than £3 million?
08:06Well, it's £3.3 million.
08:07£3.3 million. Oh, God.
08:09Yeah. How do you underpin that?
08:13Well, we have, we have, we've obviously grown over the last year by 61%. We have an 81% repeat
08:21purchase rate and three times revenue. We believe it is justified.
08:25Three times revenue. But you haven't proven that you've made any money physically. You have a short
08:32term for a couple of months, but that could change.
08:34Could change. But as the founder of the business, I feel very confident that I can keep those margins.
08:40But, you know.
08:41Anzu, you know what I think? You've come in here today, you know, asking for £100,000
08:46for a business that, well, all we can look at is historic. And historic doesn't look good,
08:52unfortunately. So I'm going to tell you that I'm out.
08:55Anzu, I think you've done really well to create a business. I think you've done great to create a,
09:04you know, a really intriguing brand. But I wonder whether the very thing that you're,
09:12the dabber itself is your issue. And whether you might have to pivot from a stainless steel type
09:21dabber to a product that is recyclable, in a similar vein to a standard takeaway,
09:31because then you're able to use Just Eat, Deliveroo, and the people that could give you scale.
09:37But you wouldn't have the dabber.
09:38Well, you would have a dabber, but it would be a dabber that's...
09:41Made of plastic.
09:43Made of, not made of plastic, that you could recycle.
09:47How much, do you know what the...
09:48For example, at the moment, I'm on a performance training regime at the moment,
09:52and I have my food delivered.
09:55And all of the products come in 100% recyclable packaging.
10:01And do you know if it gets recycled?
10:03Yeah, 100%.
10:04100%?
10:05Only 10% of recyclable plastics get recycled.
10:09One billion plastic food trays end up in landfill.
10:12Get him, ladies.
10:13So, yes, you've gotten rid of it, you've put it in the bin, you've put it in the right bin,
10:17as far as you know.
10:18Spell him.
10:18Yeah.
10:19But what happens at the end of it?
10:20Mine goes into a recycling centre in Maidenhead and is recycled.
10:24You've been there yourself, I believe.
10:25He probably owes it.
10:26Yeah?
10:26Yeah.
10:27Have you been there?
10:29I haven't, no, because I don't live there, but, you know.
10:31Exactly.
10:32Well, that's what happens.
10:33So, that's great.
10:34That's the concept that works.
10:36But I'm more intrigued about how this business scales and makes money.
10:40The big issue is the fact that you're running, even now, a 32% gross margin.
10:45There's two things that are going to happen.
10:47You're just going to have a slow death, or you need to pivot this business model.
10:53So, my suggestion there could be that the Dabber itself could be your nemesis.
10:59But I think that there's a bit of a journey to go on here.
11:01And you are asking for a lot of money.
11:03So, I'm sorry, I'm going to say that I'm out.
11:10Anshu, if I were to ask all of your customers why they subscribe to Dabber Drop,
11:16in a sentence, what would they say?
11:17So, they come to us because of the tins, the Dabbers, and then they stay because of the food.
11:25Okay.
11:25Yeah, that's really at the heart of my concern, I guess, is that I look at the business,
11:31and the only thing that I find to be unique is that it comes in a different tin.
11:35You know, and that's really at the heart of my concerns.
11:39Because suggestions that have been made to drive margin improvement go straight for the tin.
11:45I think that actually just kills the business.
11:46You become everybody else.
11:48So, I just feel like the business might need something more.
11:53So, I'm going to say that I'm out.
11:58Anshu, I think I'm going to struggle with the level investment that you've asked and your valuation.
12:08Because Peter's bang on, you just don't have enough margin in here to make any money.
12:16So, it's not an attractive investment for me.
12:19So, I'm afraid I won't be investing, but I wish you all the best.
12:22But I'm out.
12:24Anshu.
12:26Anshu.
12:27Yes.
12:27So, do you know what I think the problem is?
12:29I don't think they ate enough of the food.
12:32I don't.
12:33I munched my way through almost that whole serving, and it's absolutely gorgeous.
12:38And I think you have the right things at the heart of your business.
12:43You told us when you came in, this is about health, convenience and sustainability.
12:48I honestly think you've got a fantastic business with the right things at the core,
12:53with phenomenal food.
12:55But the actual business is severely in distress and needs a lot of work.
13:00So, I'm sorry, but it's kind of made it impossible for me to invest today.
13:03But I really hope you get it sorted because it is, what you're doing is fantastic.
13:09So, best of luck with all of it.
13:10I'm so sorry I can't invest today.
13:12I'm out.
13:13Thanks, guys.
13:14Good luck.
13:15Thank you so much for your time.
13:17Good luck.
13:17Take care.
13:20Disappointment for Anshu.
13:23While her meals were a hit, the dragons found her struggling profits less palatable,
13:28and she goes home empty-handed.
13:31I feel relieved it's over.
13:35Obviously very sad that the dragons decided not to invest.
13:38I still very much believe in the dream that there could be a double drop everywhere,
13:42so I'm going to keep going and work out what's next for the business.
13:47I quite like the dabber, though.
13:49Yeah, it's cool.
13:49Be nice at home.
13:50If I had that friends round, fill your boots.
13:52We know what to get Mr Jones for his next birthday.
13:55We do.
13:55Got it.
13:56Yeah.
14:10Tomato.
14:11Yeah, I'm good.
14:13You're good.
14:14Yeah.
14:15Hi, I'm Max.
14:17I'm 11 years old, and I am an inventor.
14:20I'm Matt, Max's dad, and we're both from Derbyshire.
14:23Check your hair.
14:24Is that right?
14:26I'll take it all right.
14:27Yeah.
14:28So, I mean, the business, it came from Max's idea, but yeah,
14:31I've dealt with any of things that he's too young to deal with.
14:33Like calculating the numbers, doing the orders, just all the boring stuff that I don't do.
14:41Fashion brand.
14:43You've got two code written all over this one.
14:45Fashion, yeah.
14:48Let the judgment begin.
14:49Ha, ha, ha.
14:51Let's do it.
14:52Let's do it.
14:52I've got to see you.
14:53Let's do it.
15:06Hi, Dragons.
15:07I'm Max.
15:07I'm 11 years old.
15:09I'm NeuroDivergent, and I'm the inventor of the fidget tea.
15:12Hi, Dragons.
15:13I'm Matt.
15:14I'm Max's dad.
15:15I'm also NeuroDivergent, and today we're asking for an investment of £50,000 for 10% equity.
15:22I've always struggled with the world around me, such as bright lights, loud noises,
15:27or smelly people, which make me want to feel like I want to explode.
15:31Trying to keep the feeling in from this is a bit like being a bottle of pop.
15:35So bubbles start to build up, and eventually they explode in a massive meltdown of emotions.
15:40But something that can help people to gently release the bubbles throughout the day
15:43are pop fidget toys.
15:45The little silicon fidget toys are a bit like infinite bubble wrap.
15:49One day I thought to myself, hmm, what if this pop was in my clothing?
15:53That way I could play with it no matter where I was.
15:57Max came and told us his idea, and we thought it sounded amazing,
16:00but surely it must already exist.
16:02But we had a thorough search, and we couldn't find anything.
16:05So we began the patent process straight away.
16:07We've now got a full UK patent granted, and we believe it is the first clothing
16:12with pop fidget toys built into the clothing right here in the hem.
16:17We launched a Kickstarter just last year, and we raised more than double our target.
16:22We got the first batch of stock in March, and we sold out of the majority of the
16:27variations in two weeks, and ended up turning over just under £19,000 in the two months.
16:33We've already had 500 of our second batch sold as pre-orders, and most recently
16:38we've had contact with a major UK charity, and we're now in discussions to create a line
16:43with them, with Max's invention.
16:46Thank you, Dragons, for your time, and have a great rest of your day.
16:48A T-shirt with built-in pop fidget toys, which aims to assist its neurodivergent wearers...
16:57Here you go.
17:00..is the proposition from Matt Palfrey and his 11-year-old son, Max.
17:05I have a sneaking suspicion that you might be sat up here in one of these chairs someday, Max.
17:10That's the plan.
17:13Matt and Max are seeking £50,000 in return for a 10% share in their clothing business.
17:20Were you nervous about coming in the den to meet us?
17:23Yeah.
17:24See, people think we're going to breathe fire.
17:27But you know, we only breathe fire when people don't know their numbers.
17:30Do you think your dad's going to be all right with his numbers?
17:32I don't know. It's been nice knowing you, if not.
17:38Max, thank you.
17:39Thanks, Max.
17:39It's all down to your dad.
17:40See you in a bit.
17:41See you in a bit.
17:41Love you.
17:42Love you.
17:43His tender years have spared Max from a potential grilling.
17:47Open says me.
17:49But though his visit was brief, the young entrepreneur has made a big impression on Sarah Davies.
17:56Oh, Matt, you must be so proud of him.
18:03It's unbelievable.
18:04The idea was his.
18:05He's been in all the business meetings, talking to like the people who helped sign the website.
18:09He's learning how to run a business.
18:10And, you know, if I left him, I don't think I could have, you know, done that.
18:14So it's amazing.
18:15Clearly a very smart kid.
18:17He really is.
18:18So when did you kind of first have the idea?
18:21Yeah.
18:21So he came up with the idea about two years ago, started the patent process.
18:25It was quite a long process.
18:26We did get a grant from our local council for R&D for £13,000.
18:33And that was towards the patent cost.
18:34So that's already in the account towards helping with that as well.
18:37So you've had £13,000 as a grant from the local council.
18:41Yep.
18:41You've done a crowdfunding and how much money did you raise in total?
18:44So that was just under £7,000, so £6,800.
18:47Yeah.
18:48That was mainly pre-orders.
18:49We then had a period where we weren't actually promoting a brand.
18:53We were getting them made.
18:55But through word of mouth, we still did about another £1,300 of sales through the website.
18:59Today, we've sold over £1,500.
19:02So total revenue of?
19:04So from when we started the Kickstarter to the end of April, £26,900.
19:11So you're very early stages in the business at the moment?
19:13Yes, yeah.
19:15Right.
19:17Hi, Matt.
19:18Hello.
19:18What do they sell for?
19:20So we sell them for £20.
19:22The reason is we want to keep the price as relatively low as possible
19:26because we're aware that a lot of our target market are on the lower end of the income bracket.
19:30Obviously, because of the way it's made and the extra work that goes into it,
19:35the first batch cost £12.90 to be made.
19:38The future batches are planned to be around £10.36.
19:42And then there's obviously a discount for orders of £5,000, £10,000,
19:46which is dropping down by about a pound each time as well.
19:48So I want to hear what our experts are on the end.
19:50Yeah.
19:51You shouldn't be paying no more than £5, £6, in my view.
19:57Yeah.
19:58But what I would be looking at is just how big this market is
20:04and whether you could attract a big supermarket or a big chain to endorse this or sponsor it.
20:13Yeah.
20:14Well, the adaptive clothing market was valued at £1.2 billion in 2022.
20:20So there's fair market there for adaptive clothing in general.
20:23I think the next step really on this is how do you create a collection?
20:28Yeah.
20:29You've got one product there which limits you to what you can sell.
20:34Yeah, absolutely.
20:34So it's to create a collection and then maybe get retailers to actually...
20:42Do you know what?
20:42I think...
20:43I don't know about that.
20:45I think you've gone to the trouble and, to my amazement, have got a patent.
20:51I don't think that you should be bringing out different ranges.
20:55I think you should license this to all retailers to get them completely involved,
21:03rather than trying to build out a niche for yourself and build your own brand.
21:07I think you could literally have this radiated across a whole market.
21:16Matt, to answer, I guess, the question that's been asked there,
21:20what is the vision for this?
21:22What is the big vision?
21:22Is it to turn it into a brand or is it something else?
21:25And so we want to kind of...
21:28There's lots of different directions if we take it.
21:29We've thought of hospital gowns with pop fidget toys built in for kids
21:34who are having operations or anxious.
21:35Business attire for adults, you know, business meetings can be quite stressful.
21:39So the opportunities are endless.
21:42Is there any other way or system you've used to score whether people are using it,
21:48like it, gaining benefit from it, other than just the sort of anecdotal
21:52evidence that you've provided?
21:54We've had reviews...
21:55We've mainly had reviews from people, like I say, and the purchase through the website
21:59and the views on social media and stuff is the main way we've been judging for you
22:04back at the moment.
22:04So wondering if there was some way to test it to some degree, just to give it a little
22:09bit more credibility in terms of the efficacy of having the poppets within the clothing.
22:14Because look, I totally get it.
22:16I guess I'm classed as a neurodivergent myself.
22:19I have ADHD.
22:19Yeah, same thing.
22:20It's just trying to understand the direction of this business
22:23and how it becomes an investable business for me as an investor.
22:26And that's why I need clarity on that sort of big vision.
22:29Are we trying to make a brand here?
22:30Is this like a product which we license?
22:32Is it something else?
22:34I think pop fidget toys are really popular with just kids in general.
22:37There's the opportunity to kind of almost feel like a flanker brand and just have a t-shirt
22:40that maybe had them built into it.
22:41It's like a mass market produced thing.
22:43And are you thinking about shorts and bracelets or other items?
22:46Yeah, so like I say, the big one we got asked for was a school uniform.
22:52Because so often it's misunderstood that it's because it's called fidget toys,
22:58but they're not toys for the people who need them.
22:59They're an aid.
23:02But I think that comes back to my point, which was,
23:06how are you going to do, you can't cover all of these markets.
23:09You can't cover every single school uniform.
23:12You can't cover every single t-shirt.
23:14It's going to be really hard.
23:15So it has to, in my head, this has to become attached to some form of whatever you've got
23:21in terms of your pattern.
23:22But there has to be something there that could be licensed to people
23:25that could be incorporated into clothing as an option.
23:30Otherwise, I'm struggling to see how you could build this out as an individual unique brand.
23:34Okay.
23:35Because there are so many routes to market that if every single school needs it in their
23:39school uniform, well, a lot of schools are attached to a supplier of uniform,
23:44and you're told to go there to go and buy your uniform.
23:47So now that means you've got to go and sell to that supplier a completely different uniform,
23:52under a completely different uniform.
23:54Well, then you have supermarkets like Asda who have a school uniform shop.
23:58They have the generic colours.
23:59Is that the majority?
23:59Exactly.
24:00Yes, that's kind of what it is.
24:02Whereas if you now license this to Asda, they can incorporate it into their clothing.
24:06But what you're not doing then, by doing that, is you can incorporate it into Next,
24:09into M&S, because you're giving it as a generic license.
24:14So I see this as a route, and I'd urge you to do it.
24:16I congratulate you on even, and particularly your son, who is absolutely bloody adorable.
24:22But I can't find a way to invest in this, so I'm going to say that I'm out.
24:26But please, I encourage you to see what you can do in the licensing front.
24:31Okay, thank you very much.
24:38It's a difficult one.
24:41The problem is, unless you link up with somebody, a charity, a retailer,
24:48and make this much more aware of the problem, it's not a business.
24:53You know, I think you've come in here pitching a business rather than a cause.
25:00Yeah.
25:01This is a cause.
25:04The problem is, is commercially, it doesn't make sense.
25:10So for that reason, I'm out.
25:11I think what you've done is fantastic.
25:18But I, at the same time, I think you're so early in your journey that as an investor,
25:25it's hard for me to see the rest of the climb in my head.
25:30So for that reason, I'm going to say that I'm out.
25:33And Matt, I'm going to tell you where I am.
25:39It isn't an investment as it is right now.
25:43But do the work with the charities, and I bet you, you will work this out.
25:48Okay.
25:48So all the best.
25:50And it was so great to meet your son, and I cannot imagine how proud you must be.
25:55So thanks for coming in, but I'm out.
26:01Matt, you've come in here asking for £50,000.
26:04What did you want to do with the money?
26:05So that would allow us to begin the work on the school uniform range, and I'll stop with that.
26:10Yep.
26:10And your patent.
26:12Yep.
26:13How confident are you in defending that?
26:15Very, very confident.
26:16The patent covers us to produce any kind of clothing with pop fidget toys in.
26:22So I'll tell you where I am.
26:23Yep.
26:23I think obviously you've come in here with a half a million pound valuation.
26:28Yep.
26:28And the business is in a very early stage.
26:31So it's really hard to justify a half a million pound valuation.
26:34Yep.
26:35You're also a very high risk business.
26:36Okay.
26:37So putting in 50,000, I would be looking to take a lot more than 10% of your business.
26:41Okay.
26:42You know, you might be looking at the 25, maybe 30% of your business.
26:46And based on everything I've heard from the other dragons today, I feel really, really strongly
26:51that your best route is exactly what Peter has said.
26:54And if your patent is as strong as what you think it is, and you can take that international,
26:59my word, this could be absolutely ginormous.
27:02Yep.
27:03All it needs is a couple of introductions to make some licensing.
27:06Yep.
27:07And I'm being really honest, it feels like the not right thing to do to take a massive stake in
27:13someone's business for the sake of opening a couple of doors.
27:17But I genuinely think you are onto something massive.
27:19Okay, thank you.
27:20So I'm going to say I don't feel like I can invest and I'm out.
27:23Yep.
27:23But I'll be watching.
27:25Okay.
27:26Thank you very much.
27:26Good luck.
27:26Good luck.
27:27Thank you all very much.
27:28Thank you, Matt.
27:28Cheers, Matt.
27:29Good luck.
27:32Matt must leave the den empty handed.
27:35But despite their failure to clinch a deal, the lad and dad team behind this family business
27:41remain relatively upbeat.
27:44Disappointed, obviously, to not get an offer, but got some fantastic feedback.
27:48They all really love the idea, which is great.
27:50To be honest, I'm not mad.
27:53I'm happy.
27:54Yeah.
27:56And, uh, yeah.
27:58Yeah.
27:59I thought Max was brilliant.
28:00Oh, my goodness.
28:00He was fantastic.
28:02Absolutely.
28:03Is he not the coolest entrepreneur we've ever seen in the dead?
28:06I mean, one minute I'm just sat in my room creating a t-shirt.
28:11Next minute I'm on one of the biggest TV shows in all of Britain.
28:16And hopefully it'll show the neurodivergent kids that they can achieve anything.
28:21No matter what disability you have, you can always find something you can be good at.
28:27Exactly.
28:41My name is Jonathan Penner.
28:42I've been living in London for the past seven years, but originally I'm French.
28:47We're essentially making luxury skincare more accessible by making luxury skincare without the
28:52luxury price.
28:54Well, I wonder in what way this is going to revolutionize our skincare regime, Deborah.
28:58I wonder.
29:02For us, it's super important to receive investment, plus getting a Dragon on board.
29:06They have a lot of experience will be invaluable for a business.
29:10So I'm a bit stressed, but overall, I'm super excited.
29:22Hello, Dragon.
29:23My name is Jonathan Penner, and I'm the founder of Azure Beauty, a brand that revolutionized the
29:28skincare industry by delivering luxury skincare without the luxury price tag.
29:33So during a trip to South Korea to visit some of the best skincare manufacturers in the world,
29:38we found that a luxury skincare brand that we all know did actually manufacture the product there.
29:43And after learning about the cost structure and really how much it truly costs to build a luxury
29:47skincare product, we found that the same brand did add a significant markup on the
29:51product price.
29:53So the question is here. Why are luxury skincare products so expensive?
29:57And to be honest with you, the answer lies in an outdated, markup-heavy supply chain.
30:01And we at Azure Beauty are actively trying to challenge this.
30:05So we streamlined our operation by building a network of labs for better ingredient sourcing.
30:09We did embrace a direct consumer sales model, and we're using subscription to further
30:13reduce our price and pass the savings back to our customer.
30:16So based on stock, ingredient price, and demand, our price fluctuates, and we encourage our customers
30:23to locking their rate with the subscriptions. Our concept has already proven to be successful.
30:28We did achieve 5.4 million pound turnovers in two years. We have 7,000 subscribers growing at a 15% rate
30:34each month, but yet we are just getting started. So today we are looking for more than just investment. We are looking for
30:42partners with expertise in retail, distributions, and international growth.
30:47So I'd like to offer you a 2.5% stake of equity for 50,000 pounds. I'm just going to bring you some product here.
30:53A range of high-end skincare products, sourced with value in mind, is the proposition from Jonathan Penner.
31:05So we have five products for now.
31:07Peter, it's one of those.
31:08Yeah. Thank you very much.
31:10Jonathan is seeking 50,000 pounds in return for a 2.5% share in his business.
31:16Sarah. Merci.
31:17And Stephen Bartlett is first to clarify exactly what's on offer.
31:28Jonathan.
31:29Yeah.
31:29Can I just confirm with you?
31:31Yeah.
31:31The real sort of value proposition of this product is that what you've managed to do is
31:37get high-quality products and give them to the consumer at an affordable price.
31:43That's correct.
31:44The way a lot of the beauty brands manufacture the products, they generally have one contract
31:49manufacturer per product. And us, we have about 35 that all know how to manufacture our products.
31:55So based on demands, based on ingredient price and availability slots, we're then going to pick
32:01the most cost-efficient on the day.
32:04So if I just take this intense firming face serum that's on the website now,
32:08so that is at £19.20. What is the average fluctuation on that product over a 12-month period?
32:16I'd say it's probably around £26, the median price. But sometimes it can go higher.
32:21Okay. And is this price fluctuation model used a lot in this industry and I'm just not familiar
32:26with it?
32:27Not at all. Not at all. We're actually working on developing something that will do this automatically,
32:32similar to what airline are essentially having. So for example, if we're running very low on stock
32:37on the face serum, we're going to simply sell it for a bit more.
32:44Okay. Can you run me through the revenue gross margin and profit so far?
32:51So the first year of business, we did about £2.2 million turnovers, £1.4 gross and a £61k net profit.
33:00And this year, we did £3.2 million turnovers, £2 million gross, and we maintained a £51k net profit.
33:09So you're spending a lot of money on overhead. You know, £3.2 million turnover, £51,000 profit.
33:17So talk me through the big headlines.
33:18I guess marketing is obviously probably our biggest category of spend. We're spending £1 million in
33:26total, like last year.
33:28And in terms of your £1 million spend, because obviously you're in growth phase, so I presume
33:34you're throwing money at it at the moment to just build brand awareness and you're not terribly worried,
33:40as long as you're not losing too much money in the bottom line. That's the phase the business is
33:44that is correct.
33:44Very funny at it. Have you worked out your most successful channels?
33:50So at the moment, pretty much 90% of our revenue is coming from our websites. And I guess the next
33:56growth phase for Azure will be to scale in retail. Our goal is to be presented in booths and everywhere.
34:03But we know that those really large companies have some very tight requirements that often
34:07startups like us cannot fulfil on the long term.
34:14Okay, so, Jonathan, I know a lot about retail. Now, if you go to Boots or you go to anybody,
34:20the first thing they'll say to you is, we'll put you on our website. Because the way I see this is,
34:26you know, there are websites who have marketplaces. There are people like Marks & Spencer's, John Lewis,
34:34Next. They've all got marketplaces, which is quite easily, you know, to get on if you know what you're
34:40doing. And I just wanted to make sure, is that a track that you would be very open to?
34:47It is not yet. Because of operational capacity to build the stock to supply all those orders,
34:54it would be quite hard to do from day one. So we decided to start by the smaller pharmacy,
35:00slowly build up our capacity to then be able to move to the large retailer. And it's all the process
35:07from start to finish that we need ideally some help on. So you want to go to pharmacies first,
35:14which is a harder slog, much more work intensive, because you need a team behind you to support them,
35:23especially if you're going direct one by one. Are you sure that's the right way?
35:27It might be the right way in a short term, just because simply we are still building
35:34the capacity in demo production, etc. But that's why you need a dragon. Exactly.
35:40Jonathan, what's the biggest risk to your business in your perspective?
35:43So your biggest risk is that we have for now 90% of our revenue that's coming
35:49from our own website, and we're looking to bring this down to 30%.
35:52And what are your traffic sources? If I look to the back end of your website,
35:55where's the traffic coming from?
35:56Meta is about 40%. Google is about 30%. And then the rest is split equally between TikTok,
36:03Snapchats, and we do direct mail. So this is really a paid ads business?
36:09For now, yeah.
36:10What are you forecasting at the moment?
36:12For this year, £6 million.
36:14Okay. And what's the gross and net on that?
36:17Not too sure the gross, but the net profit will be around 300k.
36:22Because when I was thinking about this business, you know, sometimes if a business becomes a little
36:28bit addicted to digital ads, they can show these kinds of numbers. They can show, you know, very
36:33high revenue numbers, but then profitability isn't good. It's almost a bit of a trap.
36:38Yeah.
36:38Where you need to get a return on your adverts. So paid advertising, digital ads on Meta and Google
36:43become the preference. And then the prices of those paid ads go up for a variety of different
36:49reasons, and businesses basically crumble. But then moving away to get other traffic from other
36:54sort of top of the funnel marketing, using influencer collaborations, using TikTok shopping,
36:59or other sort of creative organic social content, it's really, really hard to do.
37:03And it's so hard to do, in fact, that I think the only way this business would stand a chance is if
37:11myself and my team really, like, ran that for you. And that's not realistic. So you're incredibly
37:20impressive. Thank you. But in this case, this isn't an investment for me. So I'm going to say that I'm out.
37:24Brian, thank you.
37:29Jonathan, I'm going to tell you where I am.
37:30Um, so you are really impressive. But I see troubles ahead.
37:39And those troubles are all about cash. And you're creating that problem by the low margin,
37:48which is the very USP that you're offering to the consumer, which is fantastic. But there's a reason
37:54why the other brands have so much margin, they don't keep it for themselves, they spend it,
38:02they spend it on visibility. So when the pharmacies or boots or any any of them want to run any kind of
38:12promotion, and actually, they will insist on it, you've got to have the margin to enable them to do that.
38:19And you've got a tiny, tiny margin. So I'm afraid, despite the fact I would love to invest in you,
38:30this isn't one for me, so I'm afraid I'm out.
38:38Um, you have a business here that this is this is a brutal, brutal, I mean, every market's competitive
38:45at the moment, by the way. So it's hard to segment. However, highly, highly competitive world that you're
38:53entering. And I think it's going to come back to one thing, you need money, and a lot more money.
38:59So for that reason, sadly, I'm out. No problem.
39:02But all credit to you. Well done. Thank you.
39:08Jonathan, so, um, I love my skincare, I am really into it. And it was quite exciting when you came
39:18in the proposition. But then when I boil it down, it is just another skincare product in a really
39:26overcrowded market. So I'm sorry to say I'm out. But best of luck with it.
39:31Thank you very much.
39:36Jonathan, um, it's very apparent that, um, the journey you're on now, you're like a hamster
39:45on a wheel. You're going up there, you're doing a turnover, but you can't make the profit.
39:52Having looked at this, um, I think you are forced to look at retail in one form or another.
39:59Um, I'm not sure whether you've got the manpower or the organisation to go to individual pharmacies.
40:09That's, that's hard work.
40:11I'm more, um, inclined to think that you need to go initially to the top end of retailers.
40:22John Lewis, Fenix, uh, even M&S Online.
40:27It's because I, I, I think your price points, you know, you need to get this product into lots of
40:34people's hands and hopefully they come back to you on your website.
40:39That's correct.
40:39You know, uh, that that's the cheaper way of marketing.
40:43I mean, if that makes sense, that makes sense.
40:46Um, and you need help, but, but I'm, I mean, 50,000 for two and a half percent.
40:52I mean, look, I'll make you an offer, but it's probably one that I think that I'm comfortable
40:58with in what you need.
41:00I'll give you all of the money, 50,000, um, for 10% and I'll include in that another 50,000 of a loan
41:12that you might need in the future for working capital for a year.
41:16But, but what, what, what I'll give you for that is I'll give you, uh, definitely intro into certain retailers.
41:28And of course, open as many doors as we can.
41:34So in terms of like the valuations, I think we were pretty like generous and I'm happy to
41:45agree to, I agree to the deal, but for 5% of the company.
41:53Make it seven, you got a deal.
41:55I'm sorry, 5% would be not my last, uh, was.
42:01And, and on, on that 5%, you would, you agree with my strategy?
42:07I agree on your strategy, because I know you, you're the man in retail, so.
42:11Yeah.
42:11Okay, you got a deal.
42:15Yeah, he's got a deal.
42:20All right.
42:21Jonathan has done it.
42:23Thank you, everyone.
42:25Have a good day.
42:25Congratulations.
42:29He leaves the den with a hundred thousand pounds.
42:32And the backing of a dragon who's perfectly placed to help him conquer the high street.
42:41I'm super glad because we done a deal with Tuko, um, and our strategy is to go all into retail and
42:48looking forward to start working with him.
42:49Who's the man, you're the man, you're the man in retail.
42:54Bravo, Tuko, well done.
43:06Walter?
43:07Let's do this.
43:08My name's David Parr, I'm from Brighton.
43:13And my name's Ahmed, and I'm also from Brighton.
43:16And we've been friends for, ooh, getting on for 25 years now, and we run our business together.
43:22We don't ever fall out.
43:28We disagree on things, but we both see that as, as just a kind of iterative process of
43:33giving birth to an idea or getting it right.
43:37Yeah, we go back and forth and we talk about it, and then we decide that I'm right.
43:42And everything's fine.
43:50Hello dragons.
43:54My name's Ahmed.
43:55And my name is David.
43:56We are the founders of Present.
43:59Present is a smartphone app that enables you to send a gift to anyone in your phone contacts
44:04instantly.
44:06Now imagine this, you find out it's a friend's birthday on a WhatsApp group,
44:10and in that moment you've got no other option but to say, happy birthday buddy.
44:14With Present, you can choose a gift from a marketplace of a brand they'll love
44:18add a fun video message and text it to them instantly.
44:22Now obviously, it's not just for birthdays.
44:25Our data suggests that over 60% of our gifts sent are for just because moments.
44:29So for example, you could send someone a gift to say, thanks for investing in our company.
44:33The present moments are almost limitless.
44:35Since our launch, we've delivered just over 90,000 gifts through our go-to-market strategy called
44:42The Gift of Giving.
44:43This is where we gave people gifts to send to their friends and family, which created a wave
44:48of generosity that swept the UK as people paid the love forwards.
44:52Now perfected, our target is to hit 1 million gifts sent in the next six months.
44:57For the next chapter in our journey, we're asking for 90,000 pounds in return for a 4%
45:02investment in our company.
45:03Now, we'd like to do a live demonstration, and Sara, we're going to send you a little gift,
45:07and then we'll open the floor for questions.
45:09A smartphone app, which allows its users to send and receive instant gifts, is the offering from
45:18friends and business partners Omid Moalemi and David Parr.
45:23So you open the app, and there you are.
45:25There I am.
45:26So let's say I send you a coffee.
45:30You choose send, I can add a nice little video, I can even add a filter.
45:35So, hi Sara, here's a little coffee to get you through all the pictures today.
45:39So I've uploaded that, and then you will get a nice little message notification telling you
45:44you've received a gift.
45:46Omid and David are seeking 90,000 pounds.
45:50Oh, the gift has been received.
45:53In return for a 4% share in their company.
45:57So now if you scratch it away with your finger, so to reveal the gift beneath it.
46:02Hi Sara, here's a little coffee to get you through all the pictures today.
46:06Cute.
46:07I'll see you through the pictures.
46:08Sara Davies has accepted her complimentary pick-me-up, but can Omid and David's app
46:14tempt any of the dragons into parting with a five-figure sum?
46:21Awesome.
46:22That's really exciting.
46:26And so what, Sara had been sent there, she's been sent like a coupon to go and redeem.
46:30Yeah, in that instance.
46:31Yeah, it's a scan of an asset that's recognised at the till of the brand.
46:36So, what happens if I have the app, but who I send it to doesn't have the app?
46:42They need to download the app to receive the presents?
46:44Yes, yes.
46:45So if they're not in the app, then you just send it via your contact list.
46:48They'll receive the text message saying, Sara sent you a gift, follow here to redeem.
46:53They download the app and the gift will be there.
46:55Yeah.
46:55Okay.
46:56I think I get it.
46:57Will you just explain to me about this?
46:59You've had 90,000 people who've gifted, but you did that as a marketing.
47:05Yeah.
47:05So you haven't had 90,000 customers.
47:08Yeah.
47:08So one of the big challenges in the business was how do we build this network
47:13and how do we build it to a huge scale and very cheaply.
47:17So we partnered with O2 Priority and we then partnered with M&S to promote the gifts
47:25and send them out to people.
47:26Okay.
47:27So that big mobile phone company are sending, they're sharing their data with you.
47:34They are giving you access to their customers.
47:36They promote us.
47:38O2 say, hey, download present and get four free packs of Percy Pigs to share.
47:43And that starts creating your network within the app.
47:46Because the other people have to download the app.
47:48Exactly.
47:48Yeah.
47:49So you've gifted 90,000 gifts.
47:51That's right.
47:52Which you haven't had to buy because you've partnered with retailers who also wanted the...
47:56They get football.
47:57It's clever.
47:57I'm like the win-win round all of this marketing.
47:59That was...
48:00Whoever came up with that, that was really smart.
48:03Thanks.
48:04Yep.
48:04It was all there, obviously.
48:06I love how we were both taking the credit there.
48:07Yeah.
48:08I like the fact that you're not spending a fortune on marketing to get all this data.
48:17That you're partnering up with retailers and companies.
48:23And that's a great way of creating data.
48:27So your model is, you don't own any stock, correct?
48:30That's correct.
48:31Okay.
48:32So what percent do you get from your sales?
48:35So it varies from brand to brand.
48:38Some brands...
48:39Average?
48:4022% we get a margin.
48:43Yeah.
48:43It's early days.
48:44It is.
48:46But all of the partners have said we can talk about margins as we go along.
48:50So, since you started the business, just talk me through your financials up to where we are today.
48:58So we've turned over £41,800 this year.
49:03And we've got a net loss, as it stands, of £200.
49:08Guys, what's your customer retention rate on the app?
49:13So when someone comes in the front door and you do nothing, are they still there in six months' time?
49:18They're there in a year.
49:19They're using it.
49:20Yeah.
49:20And at what frequency?
49:21How active are they?
49:22Every 40...
49:24So the 2% are using it frequently.
49:27They're coming, they're spending every 47 days.
49:29So 2% of people come back every 47 days.
49:32Yeah.
49:32Which is...
49:33Yeah.
49:33So, and just to go back to...
49:34It's not a business.
49:35Just to go back a step before, what we do know is over 60% of people that spend
49:43are the recipients of the free gift and not the actual sender.
49:45Hence why the network viral effects works really well.
49:48Yeah, but why are the percentage of those people not using the app once they've got it?
49:52The number's been built up.
49:53Because 2% is tiny.
49:54Okay, so we have been in six campaigns where we're very active.
49:59Yeah, but outside of your campaign, because your campaign is...
50:02But we're planning to be in campaign every day.
50:04No, I get that, because you're trying to incentivise people to join.
50:08But you're giving something away for nothing.
50:10Mm.
50:11Yes.
50:11Right, that doesn't make a business.
50:13No, but the...
50:14The people that are not, because the question here is the people that are not necessarily
50:20receiving a free gift, what's the activity there across that user base of people using
50:24the app and spending money?
50:26So really 2%.
50:27It's 2%, but part of that is because of the nature of the app.
50:31That's the...
50:31That's...
50:32This is your issue.
50:33But that's exactly where we are as a business.
50:36We're a small team.
50:37We had to prove that the go-to-market strategy of building network fast and cheap was possible.
50:43We've been concentrating on that.
50:45I have no question in my mind I can turn that 2% to 3% to 4% to 5%.
50:51That's critical.
50:52I have absolutely no...
50:56I am not worried about that in the slightest.
50:59That is my job.
51:00That's what I'm going to do next.
51:04Guys, I applaud you for all you've done.
51:07It's really, really interesting.
51:08And I have to give you a lot of credit because I think...
51:11I do think you went...
51:13You aimed at the difficult...
51:14One of the key difficult challenges, which is how do we acquire customers in an innovative way?
51:19But unfortunately...
51:22The retention problem is...
51:25It's bedfellow.
51:27It's equally important.
51:28It's equally critical.
51:29So...
51:32To make an investment today, I'd be betting on you getting this group of people that came
51:36for free Percy pigs, getting them to then start adopting a brand new gifting behavior
51:41on a brand new application, which is, I just think is such a big mountain to climb.
51:48And so, with that in mind, it feels a little bit early because I'm basically
51:52banking on two individuals pivoting towards a highly retentive, highly monetizable model
51:58that I haven't yet seen.
52:01So for that reason, I'm going to say that I'm out.
52:03Well, I wish you the best.
52:04Thank you so much.
52:08Guys, I'll tell you what I think.
52:10I've been sitting here listening, and you are.
52:12You're really good.
52:13But I worry for you that you're going to end up as a really, really, really good service
52:24for all of the people who are putting their product onto your site.
52:28Because you have proven that you have a great mechanism for engaging with people,
52:33driving foot flow into the businesses that you've actually got listed.
52:39But that's very, very different from the getting people to pay.
52:43And I, without visibility of how you turn that into a model that can actually make money for you,
52:51I worry that you're going to have to work something else out.
52:58So I'm really sorry, guys.
52:59And I really do wish you all the best.
53:01But I'm out.
53:05So I really think you've got a lot of challenges here.
53:11I think some of the biggest challenges that Stephen's been mentioning, I actually agree with.
53:19But hearing you say specifically that you are very, very confident moving from the adoption to 2%,
53:27I kind of believe you.
53:30I think you've got a chance.
53:31There's no doubt that I could add huge value to this, especially when you internationalise it.
53:40And the partnerships are really interesting.
53:44So I'm going to make you an offer.
53:47The only thing is, it is going to upset you, the offer.
53:53So it's going to be bittersweet.
53:54But then at least you've got a choice of whether you want to go ahead with the dragon or not.
54:02So you've asked for £90,000 for 4%.
54:06I'm going to offer you all of the money.
54:10But I need to have 15% of the business.
54:16Thank you very much.
54:20Guys, I'll make it easier for you.
54:21I know what I can add to this.
54:26I think you guys know.
54:28We do.
54:29So because I know how I can accelerate your journey, I'm going to make you an offer.
54:39And again, I'm going to offer you the same as Peter.
54:44I'll give you all of the money, the £90,000 for 15%.
54:48But I'm also willing to share with Peter, because I think we make an amazing duo for this project.
54:55Knowing that we're both in retail, we know everybody.
54:59So that's my offer.
55:00Thank you very much.
55:01Thank you very much.
55:01Guys, I'll tell you where I'm at.
55:07I like the product.
55:09And I can see so many ways I can help the business.
55:13So I will offer you all of the money, £90,000 for 7% of the business.
55:21That's a gift.
55:26This is so hard.
55:29Yeah.
55:30Thank you, everyone.
55:31Thank you so much, really, to start with that.
55:33Yeah, I think, would there be a world in which the three of you would like to join us together,
55:40split it three ways, and at 12%?
55:42I mean, I would jump at that.
55:50Yeah, no, I think it's too beneficial for Sarah.
55:53If we're splitting this three ways, I would want to have the highest share to be selfish about it.
55:59And I'll speak up to that end.
56:03I actually agree with Peter.
56:05Peter sits here as the tech expert.
56:08Yes.
56:08I do not have expertise to help you achieve what you need to on a tech front.
56:15I think what I do have is a deep-rooted understanding of customer behaviour.
56:19Yes.
56:20But I do, in this occasion, agree that Peter adds more value than I do.
56:24So I've never, ever had this opinion, but I would sit here and be prepared to take a smaller
56:31stake because I believe Peter brings more to the table than I do.
56:35So I would genuinely be happy to split it on the offer that I gave.
56:40So I would do £30,000 for 5% and then it's up to Tuka and Sarah, whatever they want to negotiate.
56:48I think I know what I can bring. And I would want to match Peter's offer, exactly.
56:55Um, of £30,000 at 5% and then the question becomes, what does Sarah get for a £30,000?
57:05So I would offer £30,000 at two and a half percent if you split it three ways.
57:13Are you happy with that, Sarah?
57:14I offered that.
57:15OK.
57:16That's good.
57:17But that means you're giving away 12 and a half percent of the business?
57:21Instead of 12.
57:24I could be tempted.
57:28Yeah.
57:28Yeah.
57:29I think we'll do it.
57:30We've got a deal.
57:30Great.
57:30Yeah.
57:31All right.
57:32OK.
57:35Ahmed and David have done it.
57:37You won't regret that.
57:39Thank you very much.
57:40Thank you, Stephen.
57:41Thank you, Deborah.
57:41Thank you so much.
57:42Thank you, guys.
57:45The dragons fought each other for the most favourable deal, but the entrepreneurs still
57:49depart with £90,000.
57:51I think it's the right decision.
57:53I think it is, too.
57:54And the backing of a trio with the cash, contacts and credibility to turn a promising present into
58:02a very bright future.
58:04Well done, buddy.
58:05It's been a long time, but we've got here.
58:06We've done it.
58:07Smashed it.
58:09Who'd have thought?
58:10Here we are in Dragon's Den and we've got three amazing dragons who are going to take presents
58:13in the next level.
58:14Sorry, I see why you did that.
58:15You got exactly the same as what you offered.
58:17Yes.
58:18Yeah.
58:18Actually, I've got a business which is way more valuable because it's got you two on board.
58:33Dragon's Den will return later in the year.
58:36I've got 50 years' experience.
58:38You've got five years.
58:39Can you have it yet?
58:4050 years.
58:43This is the messiest set of negotiations I think I've ever had.
58:47You've remortgaged your houses.
58:49Yeah, yeah.
58:50I'm a gambling man and I want to take a punt on you.
58:52It kind of sounds like you're trying to employ me.
58:55Oh, Owen?
58:56Just let me finish speaking for just a second.
58:57I'm afraid this ain't going to work.
59:00In that case, unfortunately, Deborah, you're out.
59:03Wow.
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