Dragons' Den: Entrepreneurs reject offers from two dragons
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David Lees entered the Den in 2005 seeking £225,000 for 15 percent equity stake in his TV stand business, Mode Al. Mode Al design and manufacture plasma stands and plasma related mounting systems primary for UK but worldwide also.
Mr Lees explained to the Dragons that in three years he would turn over around £7million, however Doug Richard was very concerned.
He did not think David would be able to achieve this.
The investment would be used for tooling and capital items to increase productivity so they can expand in European and international markets.
The stands cost around £260 to make and he sells them for £582.
He told the Dragons’ that he aimed to sell over 300 units that year.
In 2002, he made a profit of £23,000. In 2003, his profit was £47,000 and in 2004, his profit was £67,000.
Mr Lees added: “According to my estimations, in three years we should be turning over about £7million a year.”
Doug Richard was shocked at the estimation.
He said: “That’s a big jump. I’m concerned that you would not actually achieve these volumes that you seek.
“It takes more than just money to get you to the next stage. It will take you full on management team and production system.
“There is still a large body of work ahead and that offers considerable risk so I’m out.”
David Lees explained to the Dragons’ that he could borrow the money from a bank however he needed a Dragons’ business expertise and guidance.
He has had offers to buy his company for £3.25million, however he has not finalised anything as he wanted someone with business experience to negotiate the deal properly.
Duncan Bannatyne and Theo Paphitis both offered the entrepreneur all of the money, but for 50 percent of the business.
Duncan thought any less than 50 percent would not give him a significant concern.
Both Duncan and Theo agreed to split the money and the equity.
David agreed to give them 25 percent equity each, however the deal eventually fell through and they did not go into partnership.
With Dragons’ Den recently coming to a close for another series, it is interesting to look at previous pitches that have received investment, and one’s that have not.
Despite not leaving with any investment, many entrepreneurs have gone on to do great things with their products.
For example, Tangle Teezer, a hairbrush company, is now worth £200million. Rob’s rejection has also been one of the biggest success stories in the show’s history.
Dragons’ Den is available to watch on BBC iPlayer.
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