It was an unlikely television hit. A bunch of entrepreneurs pitching ideas to a panel of successful business people in the hope of securing financial backing. But BBC2's Dragons' Den produced moments of pure TV gold and quickly amassed a cult following.
Peter Jones, chairman and CEO of Phones International Group and one of the "dragons", saw the impact of the programme during a recent trip to Manchester where, he says, school children were being set homework based on the show. "It has cult status because it touches the heart of entrepreneurial spirit in Britain," says Jones.
Since its focus is on entrepreneurs, it deals with the quirky and the downright eccentric. There was the father who came up with knee roller-skates because men spend much more time at home with children-on their hands and knees. He failed to squeeze any cash out of the dragons. Then there was the woman whose taxi-based board game was pooh-poohed by the panel, only to go on and become a bestseller at Hamleys.
"When the BBC first came to me to discuss what the show was about and the fact it was business-oriented, it was an instant 'yes'," says Jones. "I am a businessman not an entertainer." He believes Dragons' Den offers valuable lessons on how to pitch an idea. "You have to describe quickly and be concise," says Jones. "You learn what to say, how to say it, how to look and how to present." And most important, believes Jones, is learning just how tough all of that is.
"If you compare it to real life, it is very representative of the nerves and preparation you would undertake before going to investors," he says.
All the dragons-who last season included Doug Richard, Duncan Bannatyne, Rachel Elnaugh, Theo Paphitis and Jones-look for different things. For Jones, first impressions matter. "If it is not good, I am not saying they will always get a 'no' from me, but it gives away the first tick in the box." If anything, he adds, he is softer on the show: "I am quite kind to people, since if they turned up at my office looking like they'd been dragged through a bush backwards, [with] a stupid idea and were clearly wasting my time, it wouldn't take me as long to get rid of them."
An enthusiastic dragon, Jones has already backed several entrepreneurs, as well as working with Paphitis to salvage Rachel Elnaugh's Red Letter Days-proof, indeed, that even successful ventures can fail. "Business failure is never easy, especially if you happen to be in the public eye," says Jones. "Having said that, Rachel isn't on TV anymore giving advice or critiquing ideas."
Despite having the power to shatter people's dreams, Jones maintains that it's just a TV show-albeit one with a bit of bite. "I don't lose sleep, but neither do I just give money and let them run with it," he says. "If a business fails, at least I know we will have done everything we could." Would the entrepreneurs agree? Starting opposite, we find out whether having a dragon investor has been everything they expected.
The deal that fell through
Sector Consumer goods
Who Charles Ejogo
An umbrella vending machine is one of those simple ideas that makes you wonder how nobody thought of it before. Charles Ejogo, who appeared on the first series of Dragons' Den, is on his way to cleaning up the market with Umbrolly, which sells £2 umbrellas to commuters. By the end of the year there should be at least 700 Umbrolly vending machines in place.
"I went on the programme to see what seasoned business people thought about my business concept," says Ejogo. He was looking for £150,000 and got agreement for that investment from Peter Jones and Duncan Bannatyne. But the deal fell through due to a combination of reasons. The main stumbling block was that the Dragons wanted to use the vending machines to advertise but, for Ejogo, most important thing was to win the contract to put the vending machines on the London Underground first.
Ejogo was also concerned that the Dragons wanted a hefty 42 per cent of his business. Without the investment, Ejogo still owns more than half the equity in Umbrolly.
The programme was a great launch pad for the idea. He got good advice from Jones and the exposure he had was worth more than the cash. "As soon as the programme went on air, people were interested in the business-to a degree due to the TV exposure, but also because the Dragons' interest lent credibility," he says. Crucially, it helped get the attention of the banks and the business is now funded by a combination of invoice finance and asset finance.
Some 18 months down the line, Umbrolly machines have made their way into other countries including Ireland and Australia.
Ejogo says Umbrolly is now in a position to roll out rapidly because the team has spent so much time putting deals in place. And what of competition? Ejogo says there is a company that is trying to muscle in on the market, but that they must first go through all the teething problems he had. The biggest part of his learning curve was to recognise the need to make a mini version of the vending machine. "That is why we spent so much time getting people signed up," he says. "We didn't leave a lot else out there for competitors."
The deal that went wrong
Company Truly Madly Baby
Sector Internet and party retail
Who Julie White
When Julie White appeared on Dragons' Den last November she emerged as one of the lucky ones: Peter Jones agreed to invest £75,000 in Truly, Madly, Baby, the baby retailer she set up after the birth of her son.
"The vision was to grow in terms of consultants, create a website and put together a catalogue," says White. "We asked for £75,000-though any entrepreneur will tell you the figure you come up with is never enough because there are other things to do. But it was a starting point."
Although White won an agreement for funding from Jones last summer (when Dragons' Den was filmed) it has yet to be finalised. When Jones expressed his interest in her pitch White says: "I felt like we had won the lottery. Unfortunately, what followed was an anti-climax because there was a long time between filming and speaking to Peter Jones."
For six weeks White says she did virtually nothing to the business, while she waited for Jones to contact her, a period of time she describes as "frustrating. I really didn't know where to take the business," she says.
At the time of writing, White has yet to meet with Jones, although she has met with members of the team he dispatched to manage the investment in Truly, Madly, Baby. White says they did not come up with anything new in terms of strategy for the company.
Worse, White says the contract confirming the investment was not fair on her. Communication between the two sides has limped on-but the last contact was a text message from Jones' team in March.
Of course, what White really wanted was contact with Jones himself. "My inspiration would be Peter Jones and not his team of people," she insists. Naturally there are two sides to every story and Jones says that White's understanding of investment "was slightly misunderstood". This, he says, "is where the deal fell down". He adds: "We would stand by our commitment to fund it. But they wanted us to fund legal bills and agree other payments that would go out when our investment was made. We like the business and, indeed, Julie, but nothing has been completed." Nevertheless, White maintains that the whole Dragons' Den experience has been a positive one for her and the company.
Since the programme was aired White's fortunes and those of her business have transformed. "When we went on the programme we had four consultants in the UK," she says. Today there are 40 consultants selling baby products with plans for 60 by the end of July and a staggering 500 by the end of next year.
The company was at the Baby Show at the National Exhibition Show in Birmingham in May and is about to launch a new, 72-page catalogue of baby gear.
The deal that didn't happen
Company Mycorrhizal Systems
Sector Truffle farming
Who Dr Paul Thomas
Dr Paul Thomas was studying for a science PhD when he was asked by the BBC to appear on Dragons' Den. Thomas was starting to develop his idea of producing the perfect truffle-black truffles are more valuable per gram than gold-and he had developed the technology to grow them.
After seven years as a student, Thomas needed the money to transform his research into reality and to start buying land on which to grow the truffles. He had nothing to lose by agreeing to pitch his business on the BBC show.
As Thomas appeared on the first series he had no idea who the Dragons were until he entered the room to pitch his idea. Two Dragons-Simon Woodroffe, founder of the Yo! Sushi restaurant chain, and Rachel Elnaugh, who founded adventure gifts company Red Letter Days-were interested in investing. Woodroffe eventually agreed to invest £75,000 for 25 per cent of the business.
But in the months after he appeared on Dragons' Den Thomas says he had to learn a great deal about business very quickly. "When I went on the programme there was a massive amount of interest. People came to me but I was not prepared," says Thomas.
One of the things he learnt very quickly was to stand firm. He thought the deal Woodroffe was offering him was unfair. "I thought he was asking a bit too much. He wanted a share of everything I ever did." So he walked away and the investment from Woodroffe came to nothing.
The appearance on Dragons' Den focused and motivated Thomas so that he saw business advisers and remodelled his business plan.
He and his team have just come back from South Africa where they have finalised franchise agreements for more truffle sites. In the UK, he is busy analysing soils in Kent for yet more sites, while plantations have already gone ahead in countries such as Greece and Poland.
Mycorrhizal Systems, which is based in Manchester, now employs five people in the UK, with many more employed on plantations throughout the world.
"Now I want to concentrate on expanding," says Thomas. And he is prepared to be in it for the long haul-after all, the financial upside of harvesting truffles could be huge.
"Within a few years we will be harvesting truffles and each year after that we will harvest more," says Thomas. "There is no way I would sell out of this business."
The deal that worked out
Who Huw Gwyther
Huw Gwyther could easily be held up as a shining example of all that is good about Dragons' Den. The publishing entrepreneur made his pitch to the panel during the first series, confident he had identified a niche in the market for Wonderland, an aspirational magazine aimed at both male and female readers.
It was a bold assertion; start-up magazines jostle for success with established titles and experienced publishers. But Peter Jones invested £175,000 for a hefty 40 per cent chunk of the venture. "He was eloquent, concise, precise and his pitch was first class," says Jones of Gwyther.
"What I liked was his good presentation as well as his previous experience of being editor of a magazine. It is a risky business, but with a potentially high return." Jones claims he was also attracted by the name and says: "Wonderland would be worth a lot on the high street."
As Gwyther presented on the first series of Dragons' Den he had no idea what to expect. He had already raised £75,000 from three investors and knew he needed a further £175,000. "I am still sure we would have raised the rest," he says. "But it would have taken longer."
Gwyther says Jones, who is now chairman of the business, and his team have been a pleasure to work with and he has daily contact with them.
Wonderland launched last September and the Notting Hill based business is already self-funded and has a full-time staff of seven. "I am happy with the way things are going," says Gwyther. "We continue to be ambitious with our plans and to work hard to grow the business. We want to grow and improve the magazine so it becomes a totally indispensable arbiter of fashion and visual culture."
What impressed Jones most about Wonderland was that Gwyther was looking for investment for the company, rather than money to fund his own lifestyle-a trap many entrepreneurs fall in to.
Jones remains involved: the magazine launched in September 2005 and there are still monthly board meetings. Next is a plan to roll the brand out internationally.
There are already six issues a year with plans to increase frequency. "I am confident we can make things happen without further investment," says Gwyther.