Key Points:
Investment: £100,000
Investor: James Khan and Duncan Bannatyne
Equity Offered: 50% (with a sliding scale down to 15% if targets are met)
Business: Hungryhouse.co.uk
Target Audience: Takeaway food consumers in the UK
Challenges: Strong competition, market saturation, convincing the Dragons of the unique value proposition
Hungryhouse Secures Investment on Dragons' Den for Online Takeaway Platform
Shane Lake and Tony Charles, founders of Hungryhouse.co.uk, successfully secured a £100,000 investment from Dragons' Den's James Khan and Duncan Bannatyne. Despite facing tough scrutiny, the duo negotiated a deal that included a potential reduction in equity given specific business milestones are achieved.
The Pitch
Shane and Tony presented Hungryhouse.co.uk, an innovative online platform designed to streamline ordering from local takeaway restaurants. Their business model charges restaurants a commission per order, leveraging the growing trend of online food orders. They highlighted their progress, including 7,000 customers, 15,000 orders, and 150 restaurants signed up, with ambitious plans for expansion.
Financials and Offer
During the pitch, financial projections were detailed:
- Year 1 turnover: £430,000 (expenses: £400,000)
- Year 2 turnover: £2 million (expenses: £1 million)
- Year 3 turnover: £3.2 million (net profit: £2 million)
James Khan initially offered £50,000 for 25% equity. Duncan Bannatyne matched this offer, making the total investment £100,000 for 50% equity. However, they included a sliding scale clause, reducing their equity stake to 15% if Hungryhouse met their projected targets.
Challenges Highlighted by the Dragons
Several challenges were raised by the Dragons:
- Competition: A competitor from Denmark, launched just a month after Hungryhouse, had already secured four times as many restaurants.
- Market Saturation: The ease of entry into the market meant that other players with enough cash and savvy could quickly replicate the model.
- Unique Value Proposition: Dragons questioned what truly set Hungryhouse apart from other similar services, noting that replicating the technology and building a customer base was not insurmountable.
Conclusion
Despite tough questions and early setbacks, Shane and Tony’s belief in their business and its potential saw them walk away with the investment they sought. The deal, though demanding in equity, includes provisions that reward their success by reducing the investors' share if targets are met. This agreement not only provides Hungryhouse with necessary capital but also brings valuable expertise and resources from two experienced business partners, setting them up for potential growth and success in the competitive online takeaway market.