Key Points:
- Investment: £80,000
- Investor: Sarah Davies and Touka Suleiman
- Equity Offered: 40%
- Business: Turbo Rocks Ltd., a manufacturer of rocker plates for indoor cycling
- Target Audience: Indoor cycling enthusiasts
- Challenges: Scaling production and international distribution, founder’s part-time dedication
The Pitch:Stephen Murr, founder of Turbo Rocks Ltd., sought an £80,000 investment for a 5% equity stake in his business, which manufactures rocker plates that enhance the indoor cycling experience by mimicking the feel of outdoor riding. Murr highlighted impressive growth, boasting a 670% increase in sales over the past year and selling over 1,000 units globally. His rocker plates, sold primarily through his website, ranged in price from £250 to £499, with the most popular model costing £141 to produce. Despite this success, Murr still worked part-time in a local bike shop, which raised concerns among the Dragons about his commitment to scaling the business.
Financials and Offer:Murr’s company achieved a revenue of £365,000 in the previous year, with a net profit of £135,000. This financial success demonstrated the potential profitability of Turbo Rocks Ltd., but also underscored Murr's reluctance to fully commit to the business. The initial offer he requested valued the company at £1.6 million, which the Dragons found ambitious given the challenges ahead.
Challenges Highlighted by the Dragons:
- Commitment: Several Dragons, including Stephen Bartlett, questioned Murr’s dedication to the business, given his part-time job and hesitation to fully invest his time.
- Market Competition: Touka Suleiman raised concerns about competitors potentially replicating the product and eroding Turbo Rocks' market share.
- Scalability: The Dragons emphasized the need for a robust strategy to handle international shipping and distribution to capitalize on the growing global market for indoor cycling equipment.
Conclusion:Despite initial reservations, Murr received two offers: Sarah Davies proposed £80,000 for 35% equity, while Touka Suleiman offered the same amount for 40%. After some negotiation, Davies and Suleiman agreed to jointly invest, each taking a 20% stake for a combined 40% equity in Turbo Rocks Ltd. Murr left the Den with the investment and business partners he needed to scale his company, ready to take Turbo Rocks to new heights with the support and expertise of his new investors.