Key Points:
- Investment Sought: £75,000
- Investor: None (Offers received but no deal closed)
- Equity Offered: 2%
- Business: This is Unfolded
- Target Audience: Eco-conscious fashion consumers
- Challenges: Addressing sustainability, profitability, and valuation concerns
Callie Russell, CEO and founder of This is Unfolded, pitched his eco-friendly fashion business to the dragons, seeking an investment of £75,000 for a 2% stake. His innovative approach to fashion, which eliminates waste by producing clothes based on community feedback and pre-orders, generated revenues of £630,000 from four collections. However, Russell faced significant challenges in convincing the dragons.
The Pitch:
Russell introduced This is Unfolded, a fashion brand focused on zero-waste and community-driven design. Customers contribute to the design process, ensuring that only the desired items are produced. This model reduces waste and returns, with a return rate of just 3%, compared to the industry standard of 30-50%. Additionally, a peer-to-peer swapping platform further minimizes waste.
Financials:
- Revenue: £210,000 over six months
- Gross Profit: £90,000
- Net Profit: £40,000 (excluding headcount costs)
Valuation Dispute:
Russell's valuation of £3.5 million (five times trailing 12-month revenue) was a major sticking point for the dragons, who found it excessively high given the current profitability and operational model.
Sustainability Concerns:
Despite the zero-waste model, the dragons raised concerns about the sustainability of manufacturing in India and flying products to the UK, which contradicts the brand's eco-friendly claims. While Russell argued that they offset their carbon footprint, dragons like Zara Davies were not convinced and suggested further localization.
Offers and Outcome:
- Touker Suleiman: £75,000 for 30%
- Peter Jones: £75,000 for 15%
- Deborah Meaden: £75,000 for 12.5%
Russell countered with an offer of £75,000 for 4% equity split between Peter Jones and Deborah Meaden, which was immediately rejected. Unable to meet in the middle, Russell left without securing a deal.
Conclusion:
Despite leaving without a deal, Russell received valuable feedback. The experience underscored the need for more realistic valuations and genuine sustainability practices. Russell remains optimistic and committed to refining his business model to attract future investment.