Two deals forged in the den this week – and, interestingly, both resulting from an ability to see uses for a product in different markets.
First up is Kay Russell, a horse trainer and breeder by trade, who endearingly gets to the end of her pitch then realises she’s missed the most important bit out – what her product actually is. But no worry – her idea and a hearty laugh soon regain the Dragons’ respect.
Kay has developed a cooling bandage that allows a gentle drop of temperature on an injury and sustains it for two to three hours – after which a patented spray can be used to top up the lowered-temperature effect.
She says she originally put it on sale with the sports market in mind, but, to her surprise, it’s mainly the medical industry that’s buying it up. She wants £100,000 for 20% of her business Physicool. Having achieved a £30,000 turnover in the first quarter of only the third year of the company’s lifespan, as well as meaty contracts in Chile, India, Australia and Poland, the Dragons actually have no quibbles with her financial projections.
What does cause some friction, though, is a late admission from Kay that she has been using the exact same product under completely different branding as part of an entirely separate company. For five or six years, she’s been selling the cooling bandage as Equi-N-icE, catering for injuries to horses' legs.
James Caan doesn’t like this at all, and, with his lower lip protruding just a little, declares it’s unfair he would only be able to invest in one business and not the other. Three other Dragons nod along in a grumbly-murmur way, but Deborah Meaden has a little glimmer in her eye.
She thinks, in fact, it’s completely right to separate the two businesses – after all, who’d want to use a bandage that horses use? Kay says that was exactly her point – plus the fact that the equine market is relatively miniscule, and not many people are into it. Deborah gets this – and, to some furious eyebrow-raising from Peter Jones, makes Kay an offer of all the cash, but for a 30% stake in both business. Kay likes it. Deal done.
After a little interlude in which we mainly learn that half a million is in no way enough to market a new car – the big players, it transpires, put aside about £12m for getting the word out there (always have a realistic marketing budget for your product) – we meet Michael Pritchard.
Micheal comes across as, frankly, pretty smarmy at first: the David Brent of pitching, using half-rhymes and dramatic pauses to illustrate the magical powers of a plastic tube he’s come up with that allows consumers to get every last drop out of their spray bottles. (“A spray... that can be used... any way,” he chimes, somewhat eerily, like an enchanted imp trying to hypnotise you.)
Michael wants a pretty staggering £125,000 for 5% equity, with a plan to charge manufacturers 1p royalty per bottle the tube is used (they can produce it themselves). So far, he’s spent £100,000 on patents in 24 different countries, and after two years still hasn’t received a single one back. He’s approached five companies about using the tube, and has been battling away with them for nine months, but still hasn’t received a single order.
It’s not looking too hot for old wide-eyed Michael. And things don’t exactly warm up when James Caan asks if there is really any need for this product anyway? After all, who really cares if there’s half a millimetre's worth of toilet spray at the bottom of the bottle?
But just as him, Duncan and Deborah have ducked out, and Peter is about to do the same, Michael pulls a little something out of the bag. A pretty large something, actually. His design can also used in spray cans, and means that companies could simply use compressed air rather than flammable and unenvironmentally friendly butane or propane. Resultantly, manufacturers would save four to six pence per can, and councils could vastly reduce the cost of disposing of the waste cans.
Peter and Theo suddenly sit a little more upright – and before we know it, they’ve both offered half the money for 20% of the business each. But Michael, in another shock turn, pushes them even further – he doesn’t want either of them to have more than 7.5%! It’s really hotting up now! The two Dragons bashfully say they’ll go 10% each lowest (just half of their original ask).
Michael accepts. They shake.
Always explore the possibility of your product in every market you can think of, people! It might just be that last one that comes to mind where your real value lies.