Four Dragons In Fierce Competition Over Craft Club’s Flawless Pitch | Dragons’ Den

my buddy let's do it we met in Spain in business school where we spent a lot more time in the gin and tonic bars than we did in class and ever since we've wanted to start a business together [Music] we really like Sarah Willingham because of her background in in cocktails I could use one of those after this right now [Music] [Music] [Applause] [Music] hello our names are John and John and we are here today to ask you for 75,000 pounds in return for a three percent stake in our business craft clubs limited our mission is to reinvent the way that drinks lovers discover and enjoy new drinks the drinks industry is changing more people are drinking at home and they're choosing quality over quantity they're seeking out new products from craft producers and are left underwhelmed by what's in the supermarket at the same time the number of craft producers is booming but they have limited marketing budgets and are often left undiscovered craft clubs is launching alcohol subscription clubs to connect these craft producers with the home market every month we partner with one distillery and we send their gins to our club members along with our monthly magazine and special treats that go in the box that tell the story of the gin sounds fantastic John but how does all of that translate into numbers well our business has been cashflow positive since day one in our first year we acquired three thousand two hundred and twenty five members and turned over four hundred eighty one thousand pounds we're growing quickly our current revenue run rate stands at 1.2 million pounds and will reach 2.7 million pounds at the end of this year our goal is to deliver a 10 times return on your investment we've got some really delicious craft gin and tonics for you to try and some surprised uninformed boxes for you to open so let's let's get this Earp confident talk from london-based business partners John Burke and John Hume who looking for an investment of seventy five thousand pounds in their craft gin subscription business you've all got a different month's gem with a different once magazine and a few extra treats we've thrown into but as they're only prepared to give three percent of their business away to secure investment they'll need the Dragons to subscribe to their hefty two and a half million pound company valuation but the gin isn't proving much of a tonic for touka Suleiman John John yes um I'm gonna be drink of gin gives me headache just so I get my head around it I joined 440 pounds a month em hmm and I get one of those boxes for free you could look at it that way but it's essentially every every time you get a gin box you're charged 40 pounds so if I'm a 12-month member I'll get 12 boxes from you correct why alcohol how did you get to alcohol why wasn't it a chocolate club or whatever club well we met in Madrid witches is the home of the great gin and tonic and we definitely shared a few of those there and then we were in a pub in London behind the bar was about 40 craft chins we knew it was a hot sector and said come on John no matter how bad a job we do of it we'll probably do okay because gins just going crazy and I think we've done better than that the life of a bottle of gin depending how much you drink is about a month and it can all my family it's got kind of a go yeah ticket when you say family does that depend on how much your children drink yeah so far so convivial but the den is no place for Bon Ami online greetings card pioneer Nick Jenkins now wants to get to the bottom of their markup tell me about the gross margins in the business okay well we enjoy gross margins of twenty four percent on our box but that is the cost that's the fully loaded cost so that cludes the gin any extras that go into the box the cardboard the packaging the shipping costs the pick and pack costs box costs about 26 pounds for us to put together and ship to a customer and we charge about 34 pounds okay so that's it's pretty lean after the end of year five what do you reckon is gonna be making uh your five we should make at least 2 million in net profit so a few months into that we should be getting towards two and a half million impressive projections from the business school buddies but it appears that a hangover is setting in in Peter Jones's corner of the den I just wonder how much outgo you've been consuming recently your valuation is absolutely ludicrous you know the market really really well you're seriously credible I don't think you're delusional why are you Kiki enough to come in here and value a business like this at over 2 million pounds yeah I mean I'm we're very confident that even at that valuation in five years time we'll find that exit it'll deliver a ten times return on your investment I don't I don't doubt that if you produce a company that's gonna generate two and a half million profit and it's got a subscription base I think you could sell that for 25 million so ticking the box okay but it's not right that you come in and say your business is worth what it is I actually think it's pretty unfair so the number that you've come in here is non-negotiable we didn't say that our absolute preference would be walk out of here with a deal today crisis averted as the entrepreneurs hinted wiggle room in the 3% equity they're prepared to part with but have they done enough to keep Tuco Suleiman circling guys where is your offices by the way that time a Court Road and what are you paying there for a space for 20 a desk may be free guests in my office you'd be happy with you in Edgware Road yeah no charge like you're not for guys I'm gonna give you all that money for 35% thank you let's start the ball rolling 35% an unexpected and audacious bid for the business from Tuco Suleiman who despite throwing in the use of his office for free is asking for almost 12 times where the entrepreneurs want to part with but how serious of a to cut a deal Peter Jones wants to cut to the chase what's the most you'll give away today equity but to be honest with you just be transparent I mean we discussed that we would want to give up 5% of the company for that thanks for flushing that out Peter because you're great yeah I mean you couldn't have fault you too but why would I get involved in your business for 5% why would I do it when I can put my money in so many places I think I guess our thinking would be that sort of ten times we turn on him on that investment regardless of its bit early on that journey what percentage was that I'm really well you've just said the top percent or five percent of really I'm really not gonna be terribly interested about either so I'm I won't be investing am i it's a shame a shame would interest you well I was gonna make you an offer and it would have been at 10% okay so you're making an offer mm actually yes I'll make you that offer I'm making that offer a dramatic u-turn from a dragon just seconds away from declaring herself out Deborah Medan joins touka Suleiman in tabling an offer so far drinks Doyen sera Willingham who made her millions in global restaurant franchises has stayed silent on the sidelines but she has an ace up her sleeve I'm gonna have to blow my cover I am one of their customers you never know what he's going to walk into the den I absolutely love it thank you your business model it's so straightforward and I think the craft market in alcohol itself is is massive but your valuation is so far for me I mean even at Deborah's 10% I've got to be honest I'm I'm all I'm more 15% and at 15% I am so excited so all the money 15% three dragons have now made offers but all three want a different share of the business Deborah Medan is asking for 10% Sarah Willingham is holding out for 15% and Tuco Suleiman is asking for a substantial 35% of the company will Nick Jenkins want to join the party I think if you had come in here in six months time having proved what you've done and then I would be a lot more confident about that about that valuation so wish you all the best of luck and I might well subscribe to it but I'm afraid I'm out I think you two are brilliant thank you my issue is that it's the evaluation that you've applied to the company but I like this type of market and I think I could add a lot of value to this for you so that's the reason why I'm gonna make you an offer I'm gonna offer you all of the money for 10% Peter Jones goes head-to-head with Deborah Medan for a 10% slice of the subscription box business Sarah Willingham is using her drinks industry credentials to push for more equity in the company but with fierce competition is a change of tactics on the cards I'm gonna go half okay I'm gonna do 12 and a half percent with four offers on the table and Dragons jockeying for position the entrepreneurs have the upper hand in the den it's great to have two offers at 10% Sarah you're a bit of a outlier top of them is there any way we I mean it's very difficult for us to accept an offer of 12 and a half percent when we have offers on the table at ten so our first question to you would be would you be prepared to match the 10% that these two have on the table you're killing me please what do you think that makes an investor feel like when you're asking us to commit to you and do and change your business just to make sure that we sort of never make a decision no you're very good but you I won't believe that I'm sorry clearly you once Sara so I'm out can I just say I'm out some seriously ruffled feathers as the Den's longest-serving dragons turn on their heels and walk away from a deal but touka Suleiman's offer of 35 percent and Sara Willingham significantly lower 12 and a half percent still stand though both are substantially more than the 3% the entrepreneurs were originally willing to give away will they keep on fighting I mean we feel that 10% is as far as we can move from or 3% if we can go to 10% and we have a deal I am 12 and a half percent that I've already cut I feel like I've already come down i sat early on and wrote down 15% [Music] let's do deal I'm a comic oh that's brilliant I am really excited really excited that you can join our taste Oh time to crack Jim I love it thank you after a rollercoaster ride of a pitch the gin loving entrepreneurs leave with 75,000 pounds and with a drinks expert dragon on board we've got a great dragon we should be very happy yeah we didn't get the valuation wanted but we're paying for expertise how do you feel about being not there the real favorite what you mean where was a default was default yeah yeah yeah you you

Channel: Dragons' Den

Views: 926,735

Keywords: Dragons' Den, alcohol connoisseurs, bar industry, business challenges, business development, business innovation, business investment, business negotiation, business networking, craft alcohol industry, entrepreneurs, gin lovers, gin subscription box, international sensation, investment deal, investment proposal, monthly boxes, pitching for investment, startup funding, subscription service, venture funding

Id: JGK2UeIfS8M

Length: 15min 27sec (927 seconds)

Published: Sat Jul 04 2020