Arrogantly Priced 'Database' Infuriates Dragons | Dragons' Den

[Music] my name is Tam Thompson I'm here today to look for 250,000 pounds investment for 10% in ID scan ID scan is a business that's been set up to take advantage of recent innovations in optical card reading technology which have recently matured our first product which is club scan has been designed specifically for the restaurant bar and license trade club scan is a device that sits at the entrance to bars restaurants clubs supermarkets where age restricted goods were sold anything from alcohol tobacco solvents and we'll read 223 different formats of ID as well as 162 different passports from around the world the system is installed as a permanent installation for 33 pounds per week since launching it at beginning of the year in the first month we had sales of 10,000 pounds second months twenty last month forty this month four on target for 80,000 pounds do I have any question any questions how would this actually look to me when I arrive at the club and I need to show my identity thank you for asking the question little device like this sits at the door your door guy will ask for the ID and slips it through the system it takes about two seconds to do that you'll take the textual and image data from here and populate it into this database once you do that you can then do some very clever things so the first thing that Club scan will do is if that person is underage it will pop up and alert that that person is underage if that person has been banned historically from the club or the venue it will pop up with an alert that that person has been banned if you wish to share that information among a pub watch or Club watch or a network you can click to share that information and it will automatically be shared so you can even load onto it as Beau's and banning orders did you develop this software or did you buy this software the software has been developed with an Israeli company who are the owners of the optical card reading technology with this product we have an opportunity who owns the license they own the license we are in the distribution so you don't own that technology you bought it together you are operating it under license you're going to resell it absolutely does that not sound like something that I could do if I wanted to I could in an hour make a phone call and compete with you within a month and and do a far better job well a I don't believe in terms of producing for two and a half million pounds do you know what that can buy I think this is ridiculous and I'm very disappointed that I've had something in front of me trying to tell me that their business with two and a half million pounds when it's easily replicated its technologies out there into a damn database it's in fact I'm furious you're wasting my time I'm out tom has felt the full force of Peter Jones displeasure will Duncan Bannatyne whose business empire includes dozens of licensed premises see more potential for the system I have 38 licensed premises mm-hmm and I protect them all and I don't need this system to do it and a health club is not an ideal candidate for it but there are has a drinks license I also have bars and casinos that require far greater systems than this in place to stop people coming in illegally so there's nothing absolutely nervous so I'm not going to invest so I'm out Tom's pitch is unraveling only three dragons remain Theo Paphitis Deborah Medan and Richard Farley can town persuade any of them to invest okay maybe I need to explain the benefits of it again I don't need to hear anymore I don't need to hear any more words telling us the benefits you're entering quite late into a market and it's very very vulnerable and it's not certainly not worth 2 and 1/2 million pounds disappoint I'm out Tam's confidence is starting to fade but Theo Paphitis has been listening closely now he thinks the other dragons have failed to pick up on a vital detail okay you've turned over about 135,000 pounds yeah well in how many months four months I just think whatever has been said about the system there is obviously a demand for it if you sold that many yeah so it's worth continuing now of course we do have a major issue with the valuation you put in this business why I need from you is the following I'm gonna write your check for 250,000 pounds of my hard-earned cash yes we can do with it okay if I've received an order today for 50 systems we're not in a cash positive position perhaps to fulfill that order also in terms of creating exclusivity there is a requirement to make a purchase of 20 40 80 and 200 systems over the next four months that will put the business in a cash negative position of two hundred and thirty thousand pounds we need to cover that negative position to go forward to make a cash positive and generative it's really simple stuff it's now nothing complex well why wouldn't a bank just give it to you you know I don't I don't agree with you I'm pleased about them I'm not I'm not surprised you know I think it's quite typical for businesses to raise equity capital of this stage I just find the valuation very well if the business produces the profit that it should at the end of this year you became you keep saying that that that is you know it's not a way to value a business you know you got your assuming everything is going to go your way which from experience I know is just never the way so it could be a deal to be done but I mean it would have to be a big move from your 10% okay so is that 10% added I did have to move at a different price where do you make an offer it would have to be a number closer to 50 percent of your business in a surprise turn around towns been offered the full quarter of a million pounds but Richard Farley is thinking that he should get 50% of the business for that five times what tom was originally offering will he sacrifice half his company to get the cash his is you know when you mentioned the potential to offer 250,000 pounds you said up to 50% so there's a gap between the 10 percent and the 50 percent so what's your what would be your final offer you know I don't really you know I don't really negotiate like I just just pretty honest really I think 50 percents of fair offer so that's probably it Tom let me suggest something yes if I was give you half the money yep for 25% yeah I'd be happy to do it on the basis of a loan note but once the loan note gets repaid yep then the equity can go down to a lower level you throw more money back yeah is that something that appeals it does appeal there's one element what one element in there which is what does it go down to go yeah I'm testing the principle at the moment in an unusual twist Theo Paphitis is offering Tam a low note for a hundred and twenty-five thousand pounds this reduces Theo / fetuses risk he gets some equity and the loan has to be repaid if and when the loan is repaid his equity stake is reduced Thea is only offering Tam half the money he needs the deal now depends on Richard Farley agreeing to match it on the same terms hard to make progress he because I'm not a big fan of loan notes because to me I lose all my if the business fails I lose everything yes and if it succeeds and get a little bit back like I only get that sort of normal return back so with a risky business like this which could fail yes I prefer to have equity in that case I'm out okay Richard Farley has forced Theo Paphitis out of the deal his original offer is now the only one on the table and it's time to press home his advantage [Music] so just want to get back to my offer then as I say I don't see that your business that I get there's any way I can value your business for an investor you know that would justify me offering better than 50% and I'm richer I don't know and we have not met before I don't know much about you could you tell me who you are what you might bring to the business he's not gonna make the tea and they ain't gonna sell it look I'm eight I mean I just we don't know how this is this is your and everything I've done 50 which one you were to start with there's wolfson microelectronics which is the biggest float after their tech wreck which if you buy an iPod you'll get the chip in there let's clear speed technology which is supercomputing which is just one contract to build Asia's largest supercomputer there's ox annika I mean you're gonna do the other 47 know so it's good to hear that you know ring a bell I get emails every day begging me to invest I don't normally have to justify my contribution if you can find other investors who want to go for broke that's your choice but that's my that's my office okay good if I can take some time please it's decision time for tan Richard Farley has an extraordinary track record in technology companies and is ready to invest a quarter of a million pounds will town sacrifice a massive 50 percent of his company to secure the deal it's a no I'm afraid all right but thank you very much for your time on those times thank you - good luck great Tom leaves empty-handed in the end it just wasn't prepared to sell half his company for Richard Farley's cash and expertise I think turning down your offer he must be mad he's not the only mad person in the house I think Richards mad for giving him an offer I think he had something I was surprised he turned it down piggy had something tap you went in with a ridiculous price on the business and you actually lost a lot of credibility at the top for that I think and that was one of the reasons that you got a negative reaction initially because it was an arrogant price to put on your own business wasn't it I'm furious you're wasting my time the figures have gone through a lot of scrutiny by professionals you know the work worked with me so I thought it was a good deal it's one that got away though it is one that got away good luck thank you [Music]

Channel: Dragons' Den

Views: 939,592

Rating: 4.784646 out of 5

Keywords: dragons den, dragons den uk, evan davis, deborah meaden, peter jones, touker suleyman, tej lalvani, business pitching, entrepreneur, game show, shark tank, dragons, den, best, bits, new, worst, pitches, funniest, moments, most, shocking, ideas, products, businesses, dragons den funny, dragons den 2019, dragons den season 17, ID Scan, Fake ID Maker, making a Fake ID

Id: RTXqaLEdK5k

Length: 11min 42sec (702 seconds)

Published: Sat Aug 17 2019