Key Points:
- Investment Sought: £50,000
- Investor: No investor as no deal was finalized.
- Equity Offered: Initially 2%, with final negotiation attempts up to 6%.
- Business: Quarter, a light spirits brand specializing in low-alcohol gin.
- Target Audience: Health-conscious consumers, particularly those reducing their alcohol intake.
- Challenges: Establishing a new product category, high valuation concerns, and market competition from established brands.
The Pitch
Fabian Clark and Rowan Radhakrishnan introduced their business, Quarter, a new type of gin with only 12% ABV—providing all the flavor with a quarter of the alcohol and calories. Their pitch emphasized the growing trend towards lighter, more health-conscious drinking options, particularly among younger generations.
Financials and Offer
The founders were seeking £50,000 for a 2% stake in Quarter as part of a broader fundraising effort. They disclosed their financial growth, showing significant revenue increases month-on-month, despite still being in the early market introduction phase.
Challenges Highlighted by the Dragons
The Dragons raised several concerns, notably the high company valuation of £2.5 million, which was based on optimistic future forecasts rather than current profitability. The competitive spirit market, dominated by established brands, was seen as a significant barrier to entry. The Dragons questioned the necessity of a low-alcohol option over simply choosing smaller quantities of standard alcoholic drinks.
Conclusion
Despite the innovative concept and appealing branding, no deal was struck. The entrepreneurs declined offers that required giving up significantly more equity than anticipated. This episode highlighted the difficulty of introducing a new niche product into a market with entrenched competitors and the challenge of convincing investors of its future profitability against conservative valuations. Fabian and Rowan left without a deal but remained optimistic about their business's potential in the evolving spirits industry.