Foodies in The Den (15:8)

I love Dragons’ Den. There, I said it. I know some business folk are a dismissive of the show because it can glamourise the investment process and potentially mislead around the rigor involved in securing funding – but I just love it! You can also accuse the show of sensationalising some of the issues which could literally make or break a young business but we’re all adults here so surely we know what we’re letting ourselves in for?

There are many reasons to love The Den and if it is used correctly it can be the perfect platform to propel a small business to the next level which is a fantastic gift to the small business world. However, I love it for one reason: the business lessons. It’s a marvellous microcosm for the business world and emphasises some of the amazing abilities and frustrating failings of the entrepreneurial world.

I have watched the show all the way through but this series I decided not to be a passive observer and get stuck in to offer my thoughts on any foodie that makes their way passed Evan’s lair in the basement and through those ominous sliding elevator doors. So this series I’m going to pull out some of the business lessons gleaned from any brave foodie to enter The Den. I’d also like to point out that what follows is not a criticism but a critique; even if it goes badly wrong, anyone that demonstrates the stones to go on TV to bare all has my respect!

northernmunkeebites.dragonsdenbtemptedSeason 15: episode 8

Entrepreneur(s): Sarah Hilleary

Company: B-Tempted

Elevator Pitch: great tasting gluten free cakes with 9 flavours in a range of formats

Asking For: £75k in exchange for 5% equity

What Went Well?

The Product: it’s on trend. The feedback from all the Dragons on taste was very complimentary, which is clearly a must. It’s well packaged and well thought out in terms of market positioning and pricing (which is usually out of kilter with reality on ‘artisan’ foods).

The Plan: the foodpreneur was very clear with her reason for entering The Den: the opportunity to launch in Tesco Express. Not only is it a great selling point but it shows very clear direction which is quite often lacking from pitches.

The Brand: I can’t say it loudly enough: YOU LIVE AND DIE BY YOUR BRAND. This brand was very well joined up; even down to the Temptation Officer living and breathing the brand assets with a cheeky wink every now and again.

What Could Have Gone Better?

The Numbers: Tuker said, ‘rule number 1 in The Den: you’ve got to get your figures right’. Well unfortunately she didn’t. However, Tuker did launch a bit of a financial assault on the foodie. You could argue it was a bit unfair and most people would crumble under that kind of pressure.

Business Valuation: now this is always a contentious issue – it’s the battle ground in an investor/entrepreneur relationship. For me the ball was dropped when the foodpreneur admitted that the valuation was delivered by a third party. Terminal Value calculated on hugely successful (and ultimately very different) business models was a faux pas.

‘Artisan’: I’m sorry but this is a bugbear of mine. The ‘artisan’ label has become far too manufactured and I fear it’s designed to hoodwink shoppers. If this business has designs on expansion that label cannot carry through.

What Other Lessons Can We Learn?

The Power is in the Plan: I truly believe that this pitch was saved because of the strength and clarity of the entrepreneur’s plan. For an investor it’s absolutely paramount that they understand where their money is going and how the entrepreneur is going to deliver the (usually) ambitious numbers. These elements were evident today!

Outcome: Success! 30% given to the new Dragon Tej Lalvani with a buy back option.

Would Munkee invest? Can I sit on the fence? The business proposition and branding are fantastic. However my nervousness is in the product category. It’s a crowded market and scalability isn’t easy without lowering quality or principles. However, if this is possible then B-Tempted might be onto a winner. So would I take a punt? Yeh go on!

Northern Munkee.

 

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Foodies in The Den (15:2)

I love Dragons’ Den. There, I said it. I know some business folk are a dismissive of the show because it can glamourise the investment process and potentially mislead around the rigor involved in securing funding – but I just love it! You can also accuse the show of sensationalising some of the issues which could literally make or break a young business but we’re all adults here so surely we know what we’re letting ourselves in for?

There are many reasons to love The Den and if it is used correctly it can be the perfect platform to propel a small business to the next level which is a fantastic gift to the small business world. However, I love it for one reason: the business lessons. It’s a marvellous microcosm for the business world and emphasises some of the amazing abilities and frustrating failings of the entrepreneurial world.

I have watched the show all the way through but this series I decided not to be a passive observer and get stuck in to offer my thoughts on any foodie that makes their way passed Evan’s lair in the basement and through those ominous sliding elevator doors. So this series I’m going to pull out some of the business lessons gleaned from any brave foodie to enter The Den. I’d also like to point out that what follows is not a criticism but a critique; even if it goes badly wrong, anyone that demonstrates the stones to go on TV to bare all has my respect!

northernmunkeebites.dragonsdennaturalnutrientsSeason 15: episode 2

Entrepreneur(s): Liam Sheriff and Craig Newbigin

Company: Natural Nutrients UK

Elevator Pitch: high quality supplement brand that offers 100% transparency and doesn’t contain artificial nasties.

Asking For: £100k in exchange for 10% equity

What Went Well?

The Products: not only are the products on trend and relevant but the duo have proliferated sensibly and developed beyond the functional category. This may present some practical issues when working with retailers whose individual buyers may only look after part of their portfolio. However, having a range that differs in volume and margin is a powerful position when managing margin mix.

Reasons to Believe: having Holland & Barrett on board for a business like Natural Nutrients is a massive coup and absolutely the right retailer at this stage. This will have been a fantastic selling point.

Peter Jones’ Empathy: this isn’t something that you can prepare for but this was fundamental to the success of the pitch. The pair were subjected to harsh loan terms to secure previous investment and not many businesses get offered the opportunity to have a business leader support them in improving that situation. How’s that for belief.

What Could Have Gone Better?

The Numbers: margin is an issue that you can’t escape from and this company was walking a tight rope at a really early stage in the business. The retail price point is high and the margin they make is low; it’s a slippery slope from here but not unmanageable.

What Other Lessons Can We Learn?

Maintain Control: Liam Sheriff did a great job in negotiating a way to secure the investment but have an option to maintain more than a 51% share in the business. This will be important to the business going forward and ensures that there is a clear head driving direction. The inability to make a quick decision can be crippling for some small businesses.

Outcome: Success! 40% equity given to Peter Jones and Tej Lalvani with a 5% optional buy back if the business hits 2018 targets.

Would Munkee invest? No, I’m afraid I’m too risk averse for this one. The market is very clustered and dominated by brands backed by huge companies. I’d also have more concern over the terms of the loan and what was agreed in the past, for me that questioned the credibility of the business. However all Dragon’s made an offer so it looks like Munkee may be wrong!

Northern Munkee.

 

Foodies in The Den (15:1)

I love Dragons’ Den. There, I said it. I know some business folk are a dismissive of the show because it can glamourise the investment process and potentially mislead around the rigor involved in securing funding – but I just love it! You can also accuse the show of sensationalising some of the issues which could literally make or break a young business but we’re all adults here so surely we know what we’re letting ourselves in for?

There are many reasons to love The Den and if it is used correctly it can be the perfect platform to propel a small business to the next level which is a fantastic gift to the small business world. However, I love it for one reason: the business lessons. It’s a marvellous microcosm for the business world and emphasises some of the amazing abilities and frustrating failings of the entrepreneurial world.

I have watched the show all the way through but this series I decided not to be a passive observer and get stuck in to offer my thoughts on any foodie that makes their way passed Evan’s lair in the basement and through those ominous sliding elevator doors. So this series I’m going to pull out some of the business lessons gleaned from any brave foodie to enter The Den. I’d also like to point out that what follows is not a criticism but a critique; even if it goes badly wrong, anyone that demonstrates the stones to go on TV to bare all has my respect!

northernmunkeebites.dragonsdencreativenatureSeason 15: episode 1

Entrepreneur(s): Julianne Ponan and Matthew Ford

Company: Creative Nature Superfoods

Elevator Pitch: ranges of free-from snack bars, innovative baking mixes and creative superfoods designed to cater for top 14 allergies

Asking For: £75k in exchange for 5% equity

What Went Well?

Preparation: fail to prepare and all that is key for any business pitch but it is absolutely fundamental when you’re asking someone to believe in you and to part with their money. The entrepreneurs demonstrated a strong knowledge of their own business and also the marketplace which might sound like a basic requirement but is often found wanting.

The business idea: the product ranges couldn’t be more on trend; it’s on-the-go, it’s home baking and it’s superfoods. Winning. Deborah Meaden identified that the freefrom shopper has developed into a shopper that no longer surfs packaging but wants product confidence and assurance and these guys have got it.

Distribution: there’s nothing better for a potential investor to hear than people are already buying your products and there are lots of retailers supporting it. Creative Nature was able to successfully demonstrate that its turnover is generated from a wide range of distribution with some very credible retailers. Although I’m not too sure how Christine Tacon would feel about the confession that the distribution was bought through ‘listing fees’; nevertheless from the entrepreneurs’ point of view this is a very savvy use of seed money.

What Could Have Gone Better?

Owner’s Relationship: the fact that Matthew holds no shares in the business may have come across as a bit of a tongue-in-cheek comment from Peter Jones but the reality is this information did cast a shadow of doubt in The Den. Family businesses are fantastic and there’s nothing more heart-warming than seeing a family business succeed however it does raise some questions from a business perspective. Who really owns the business? Who really runs the business? How integral is Matthew? What happens if he leaves and what’s his incentive to stay? These queries were well handled but these issues will ultimately need clearing up.

Rose-Tinted Forecasting: the ‘£1M contract’ in Co-Op was a bit of a faux pas that the Dragons were bound to pick apart. I completely understand where the numbers have come from, it’s simple science. However, we’re dealing with an art form and forecasting is not that simple. Assuming that a Co-Op store will achieve the same rate of sale as an ASDA is a little naïve; in some product categories ASDA will dwarf Co-Op and vice-versa in others. I do sympathise but a big bold headline like this will get scrutinised and criticised by any savvy investor.

What Other Lessons Can We Learn?

Profit is KING: there’s a cliché in business that sales in vanity and profit is sanity and everyone in the room recognised that Creative Nature’s margins were too tight for comfort. Every business needs to account for scalability and assume some benefits as you scale up however if margins are tight at the early stage of a business that’s a real concern. It’s not unfixable but if you can’t sustain profitability you’re in for a rough ride!

Outcome: Success! 25% equity given to Deborah Meaden with a 5% optional buy back if the business hits 2018 targets.

Would Munkee invest? Yes! Who am I to argue with the Meaden?! Creative Nature has the makings of a great brand and business. It appears like a sound investment and I’m sure there’ll be more than just Co-Op placing new orders.

Northern Munkee.