Key Points:
- Investment: £150,000
- Investor: Peter Jones and one other dragon
- Equity Offered: Originally 5%, ended with 30%
- Business: C Enterprise, creator of the Parate Workshop, a multi-functional power tool set
- Target Audience: DIY enthusiasts and tradesmen
- Challenges: Complex company structure and shareholder arrangement
The Pitch
Christopher Ellsworthy, a talented product designer from Bristol, presented his innovative Parate Workshop to the Dragons. This four-piece cordless power tool set stands out because each handheld tool can transform into its benchtop equivalent. Christopher asked for £150,000 in exchange for 5% equity in his rapidly growing business, which has already seen impressive sales.
Financials and Offer
Christopher disclosed that in the last year and a half, his company had a turnover of £2.7 million with a gross profit margin of 25%. However, there was a net loss of £55,000 last year. Despite the financial challenges, the projected turnover for the current year was three million pounds, with an expected net profit of £450,000.
Challenges Highlighted by the Dragons
The Dragons were initially impressed with the product's design and functionality but were concerned about the business's complex structure. Ownership was spread across multiple international entities, making the investment proposition risky and complicated. This complexity led several Dragons to withdraw their interest.
Conclusion
After a tense negotiation, Christopher successfully secured a deal with Peter Jones and another dragon for the full investment amount but had to concede a much higher equity stake of 30%. The agreement involved simplifying the company's structure to make it more manageable and investor-friendly. This episode underscores the importance of not only having a great product but also a clear and straightforward business structure to attract investors.