Key Points:
Investment: £50,000
Investor: Deborah Meaden and Sarah Davies
Equity Offered: 30% (15% each)
Business: London Neutropics
Target Audience: Health-conscious individuals and businesses
Challenges: Brand recognition, competitive market, scalability concerns
The Pitch
Zane Peer and Chezz Shake, the founders of London Neutropics, entered the Dragons' Den seeking an investment of £50,000 for a 10% equity stake in their adaptogenic wellness company. They launched their business in March 2020 and have since driven over £60,000 in revenue within the first 12 months. Their product line includes three adaptogenic coffee blends designed to enhance cognitive function and alleviate stress without the typical jitters associated with regular coffee.
The entrepreneurs emphasized their unique selling proposition: premium adaptogenic coffee blends. They aim to help people incorporate these beneficial ingredients into their daily diets easily. The coffee blends – Grind, Zen, and Mojo – contain natural substances like Cordyceps mushrooms, which are known to increase aerobic capacity and oxygen flow.
Financials and Offer
London Neutropics has achieved £120,000 in total revenue with £56,000 gross and a net loss of £30,000. They have £25,000 in cash and another £25,000 in stock. Despite their strong marketing efforts, which saw them spend £37,000 to generate over £100,000 in revenue, their sales have been slower than expected.
Chezz and Zane initially sought £50,000 for 10% equity but faced skepticism regarding their branding, market positioning, and financial management. Eventually, Deborah Meaden and Sarah Davies offered to split the investment, each contributing £25,000 for 15% equity, resulting in a combined 30% stake for the dragons.
Challenges Highlighted by the Dragons
- Brand Recognition: Stephen Bartlett pointed out the brand’s lack of memorability, which could hinder its competitive edge in a crowded market.
- Market Competition: The adaptogenic coffee market is growing but highly competitive. Other brands are perceived as having stronger market presence and product differentiation.
- Scalability: The dragons questioned the ability of London Neutropics to scale quickly and achieve significant market penetration, given their current sales figures and market strategy.
- Financial Management: Concerns were raised about the management of their finances, particularly the delay in reinvesting available funds into marketing to boost sales.
Conclusion
Despite initial reservations, Zane and Chezz managed to turn the tide in their favor. They highlighted their potential in the B2B sector, particularly in corporate gifting and hospitality, which piqued the interest of the dragons. Their impassioned pitch and willingness to negotiate ultimately secured a deal with Deborah Meaden and Sarah Davies.
The final agreement was for the full £50,000 investment, split between Deborah and Sarah, in exchange for a 30% equity stake. This deal was contingent on the promise that if the business performed well, the equity could reduce to 10% each after 18 months. This partnership brings valuable mentorship and resources, giving London Neutropics a fighting chance to scale and succeed in a competitive market.
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