Key Points:
Investment: £70,000
Investor: Peter Jones and Deborah Meaden
Equity Offered: 10% (5% each to Peter Jones and Deborah Meaden)
Business: Compare Ethics
Target Audience: Ethical and sustainable brands, conscious consumers
Challenges: Verification credibility, high valuation, market penetration
A Deal Made: £70,000 for 10% with Peter Jones and Deborah Meaden
James Omisaki and Abby Morrison, co-founders of Compare Ethics, successfully secured a £70,000 investment on Dragons' Den. The investment came from Peter Jones and Deborah Meaden, each taking 5% equity, resulting in a total 10% stake in the business.
The Pitch
James and Abby introduced Compare Ethics, a platform designed to verify and communicate the sustainability claims of various brands. Their goal is to enhance consumer trust in ethical products by utilizing advanced algorithms and rigorous data verification processes. They initially sought £70,000 for a 2.4% equity stake, valuing their company at nearly £3 million.
Financials and Offer
The entrepreneurs detailed their subscription model, charging brands between £1,000 and £200,000 annually based on size and need. They projected £200,000 in revenue for the first year, with a net loss of £176,000, and anticipated reaching £1.3 million in turnover by the second year with a net profit of £170,000.
Challenges Highlighted by the Dragons
Several Dragons questioned the feasibility of Compare Ethics' business model and their ability to verify sustainability claims without extensive on-site inspections. Tuka Suleiman expressed doubts about the platform's capacity to verify large-scale manufacturing processes. Tej Lalvani raised concerns about the high valuation given the company's early stage and lack of substantial contracts with large brands.
Conclusion
Despite the initial skepticism, James and Abby's expertise and passion convinced Peter Jones and Deborah Meaden to jointly invest. They secured the full £70,000 in exchange for 10% equity, effectively partnering with two of the longest-serving Dragons. This deal promises to bolster Compare Ethics' credibility and market reach, allowing them to further their mission of promoting transparency in the ethical fashion industry.