Key Points:
Investment: £80,000
Investor: Peter
Equity Offered: 10%
Business: Timostat, a thermostat company
Target Audience: HMOs, student houses, holiday parks, Airbnb rentals
Challenges: Competing with big players, capital expenditure for bulk installations
The Pitch
In a recent episode of Dragons' Den, Anthony presented his innovative thermostat company, Timostat, seeking an investment of £80,000 for a 10% equity stake. Timostat is designed to address the inefficiency of traditional thermostats in shared accommodations, particularly HMOs and student houses. The thermostat operates on a timer, ensuring that heating is not left running unnecessarily, thereby saving energy and reducing costs for landlords.
Financials and Offer
Anthony's business has shown significant growth, with revenues increasing from £175,000 in 2021 to £394,000 in 2023. The company's gross profit for the last year was £228,000, with a net profit of £93,000. Despite the business's success and clear market need, Anthony was looking for the Dragons' expertise to expand into new markets, such as holiday parks and Airbnb rentals.
Challenges Highlighted by the Dragons
Several Dragons expressed concerns about the scalability and competition in the thermostat market:
- Debbie: She acknowledged the product's potential but highlighted the significant capital expenditure required to implement the system across all units in her holiday parks, leading her to opt-out.
- Peter: While he appreciated the innovation, he doubted his passion for the thermostat industry and chose not to invest.
- Other Dragons: They pointed out the competitive landscape, fearing that larger companies with more advanced technologies could overshadow Timostat.
Conclusion
Despite the skepticism from most Dragons, Peter saw potential in Anthony's connections and the quick payback of the investment. He offered the full £80,000 but for 35% equity, reducing to 25% after recouping his investment. Anthony countered with a request for 30% equity, reducing to 15% post-payback, but Peter stood firm on his offer. After much deliberation, Anthony accepted Peter’s final offer, securing the £80,000 investment for a 35% stake, with a reduction to 25% after the initial investment is returned.
This deal highlights the importance of negotiation and understanding market challenges while showcasing the potential for innovative solutions to thrive with the right support and investment.