As spring arrived, so did the latest series of a favourite television show you may well have been waiting for.
Full of drama and suspense (albeit a different kind to the sort offered by the soaps), the show can have you rooting for some contestants, scoffing at others and, at times, laughing out loud in disbelief.
The television show in question? BBC’s Dragon’s Den, the show that has been with us since 2005, and is now an institution.
The show provides opportunity for wannabe entrepreneurs to pitch their “million-pound ideas” to five successful and seasoned businesspeople – otherwise known as “the Dragons” – in the hope of clinching financial backing that could turn their big idea into a huge brand.
This year, Deborah Meaden, Peter Jones, Touker Suleyman, Tej Lalvani and Sara Davies will be making up the panel of Dragons, who will use their experience and keen eye for an opportunity to pick “winning” ideas.
If there is any doubting the Dragon’s ability to see an opportunity you only need to remember some of the companies that became highly successful thanks to the show, including Reggae Reggae Sauce, Skinny Tan, and personalised children’s book company, Wonderbly.
However, the Dragons also get it wrong sometimes, and reject ideas that go on to earn millions. Read on to discover five business opportunities that the Dragons missed, and what investors might learn from the mistakes.
In 2009, James Nash took his idea of filling plastic wine glasses with a single serving of wine, sealed with a foil lid, to the Dragons.
Duncan Bannatyne accused the idea of being tacky, saying “people did not want to buy wine in a plastic glass like that”. As a result, James failed to secure the £250,000 he was looking for in exchange for a 25% stake in the company.
However, those wanting a glass of wine while commuting home on the train disagreed with Duncan, as did many picnickers. After being taken up by Marks & Spencer, which used it for its award-winning Le Froglet wine, sales of Cup-a-Wine went from strength to strength.
The distinctive cases that children can ride on was the brainchild of Rob Law, who appeared on the show wanting £100,000 in return for 10% of the business.
Theo Paphitis said he didn’t like the design, then broke a strap hook, so Rob left empty handed. Yet today, Trunki suitcases can be found in many retailers and the reported turnover in 2019 for Rob’s company was more than £8.7 million.
3. Tangle Teezer
In 2007, the Tangle Teezer hairbrush was pitched to the Dragons by Shaun Pulfrey, who was looking for an £80,000 cash injection for a 15% stake in his business. Yet he left empty handed after his idea was rejected by Duncan Bannatyne and Deborah Meaden.
However, it went on to become a firm favourite of several celebrities, with the Evening Standard reporting the company as being worth £65 million in 2020.
In 2018, co-founder of BrewDog, James Watt, revealed that he and business partner Martin Dickie were rejected by Dragons’ Den in 2008.
The craft beer company was just two years old at the time and the pair wanted £100,000 in return for 20% of the business. As the business was valued at £1.8 billion when James made the revelation in 2018, the initial investment would have returned £360 million that year.
Interestingly, the pitch was not rejected by the Dragons. After an initial screen test, the pair were rejected by the show’s producers.
Amazingly, BrewDog may not have been the biggest miss for Dragons’ Den. That probably goes to Hungryhouse, which became one of the biggest names in the takeaway food market.
While co-founders Shane Lake and Tony Charles secured an offer of £100,000 from James Caan and Duncan Bannatyne when they appeared on the show, in exchange for 50% of the business, the deal later fell through.
However, the company was reportedly valued at £2 billion in 2015, and merged with Just Eat in February 2018.
Investing is not about a gut feeling
You can’t get it right all of the time, and the Dragons are no different to anyone else. One reason the Dragons may have missed opportunities is that they are largely working on gut feelings.
While they will conduct research, and the Dragons will ask searching questions that draw on their vast experience and success, it’s unlikely they have seen a full breakdown of the company, its costs and marketing strategy.
Indeed, the whole point about the show is the wannabe entrepreneur’s “pitch” and how it’s received by the Dragons. To put it another way, it’s like investing without a full understanding of the product you are putting money into, and using your “gut feeling” to decide – which may be the case if you are a DIY investor.
As financial professionals, we are extremely careful about what we recommend to you, and it will always be backed up by thorough research, analysis of data, and a comprehensive understanding of your situation.
Doing this allows us to identify opportunities that potentially could boost your financial strategy and explain them to you in a clear and understandable way, so that you have the confidence to make the right decision.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.