Dragons Frustrated Over Equity Negotiations | Dragons’ Den

There's nothing that investors like more Than Innovative products combined with Entrepreneurs who have a proven track Record in business Next into the den are two brothers Jim And Richard George from Worcestershire Who think they score on both counts will The dragons agree I'm Jim George and I'm Richard George And we're from post saver and we're Looking for a hundred and sixty thousand Pounds for a 20 stake in our business This Timber fence post has failed after Only three years in service as a Solution to this problem we've developed Patented and manufacture a unique dual Layer sleeve system That protects the vulnerable parts of The post To apply simply heat shrink the sleeve Onto the post The result of this is a double life Fence post and double life fence posts Will save consumers at least 40 percent On the life cycle cost of their fencing We launched post-saver onto the UK Market two years ago and following more And more premature fencing failures our Sales are growing month on month we Believe post-saver represents an Excellent investment opportunity for the Dragons thank you thank you An assured pitch from Brothers Jim and Richard George to increase production of

Their fence post preservation sleeve They need a 160 000 pound cash injection In return for 20 of their company Theoper fetus is first to question the Worcestershire siblings Richard Jim yep premature fencing Failure yes it's never kept me up at Night no but if you just bought a nice New fence and paid X thousand pounds for It and after three or four years defense Purge right there at ground level and The fence fell over you you wouldn't be Very happy would you well Just explain to me how it works I Understand if you put a cover over Something it protects it yep but the Pointed bit is still in the ground well Just just to give you some some Background ground level was was about Here on this product below this band The Timbers totally intact so it's about two Or three inches below ground level where You get the very high rates of Decay it Does seem if I'm doing small amounts of Fencing DIY I'm not going to have the Equipment to do use it somewhere we do Have a growing number of stockists and Contractors and two large Sawmills now Starting to take the product and roll it Out so that you'd be in a position where You can actually buy the post with the Sleeve already on it is that the market Is that that is the primary Market yes The market size on the UK Market

Somewhere between 40 and 80 million Posts go into the ground every year We've got Global IP protection in France Germany U.S Canada Australia and Japan Thank you [Music] Confident claims and the dragons are Clearly impressed now Hillary duvet Wants to drill down into the finances Talk me through the numbers and your Projections our Target for this year is About 240 000 yeah next year we're Looking at five hundred and ten thousand Right so where are you going to double That growth from Um natural organic growth which we're Seeing more and more of we're learning All the time about you know how best to Tackle the market you know so you know When you say you're learning all the Time you've actually run businesses Before yeah we had two businesses we Were manufacturing door products which We sold about 10 years ago and they've Been some of the products that we've Developed and we licensed that to a Large German company and we subsequently Sold the IP to them about two years ago We made about 400 000 which we've plowed Into the development of postsaver Jim Richard hi I'm Deborah Um so you talked about turnover yes Which is great but I'm much more Interested in profit with this with

First year Um we're looking at a net profit of just Over 30 000. Next year 160 And then year three just over 380 000 on That okay so in this year what's your Pipeline looking like we received an Order from Sawmill this week which is Six seven thousand Pounds we're getting Regular orders from Farmers fencing Contractors online orders we're Currently in discussions with network Rail network rail are responsible for For all line side fencing I'm going to make you an offer I'm going to offer you all the money And I want 35 of the business Jim It's a very kind offer but I don't think We could we put so much into it we've Got so much confidence in it [Music] But an early rebuttal too from The Confident Duo will Duncan bannatyne Choose to enter The Fray [Applause] [Music] Richard Jim Where are you And your percentage what's negotiable To 25 I would guess We've got a lot of confidence in the Product and the market I've got I've got a lot of confidence in

You guys and I've Got Confidence in the Product I'm not convinced though That there's enough profit because you Have to sell so many of them in order to Get such a big return yeah I find it difficult To offer you more than your 160 000 Pound for 30 percent Well I'm happy Half the money split it with another Dragon if I know where to split it Okay [Music] Unable to match the brother's percentage Demands Duncan panatine gives them two Further investment options Will theopher fetus choose to undercut His rivals What are you looking for out of this Uh essentially we're looking to Establish the product build up the Business with good value in it and then At that point there are lots of options Out there give me just an idea of a Timeline Um five years is the is is the period We're looking at Okay I will offer you all the money I would also be wanting 30 percent Can I ask you one question Would you be happier with two dragons

Possibly yeah yeah Well if Duncan's happy I'm happy to um Split the equity and split the um Investment okay Eight thousand each And 30 between us So you get us both yeah Jim and George now have four offers on The table but all for more Equity than They want to give away Can Peter Jones find a way of matching Their valuation [Music] Jim Richard I think you're a model Presenters you clearly experienced You've been there and done it you are an Investor's dream as individuals But 160 000 pounds for a 25 Circa Investment I I think that the business Will struggle to make the level of Return in terms of the opportunity with This For those Reasons I'm not going to Invest and I'm out okay Okay I'm going to give you I'm going to Give you a second option on this I am prepared to look at the percentages But I personally think I would add an Awful lot of value Um and I am Just going to struggle to get below 30 Percent But what I would do Is say to you

But if you hit the targets that you've Given us I would hand you back five percent of The shares You get to your 25 percent Well we talk about that briefly thank You 25.25 isn't it I don't know no I'll leave it to you Okay Think carefully We've decided to to stick to our guns on The 25 percent What you've just done The Logical You have given me a set of targets that You are going to meet so you've got your 25 percent yeah The tension mounts as the sure-footed Entrepreneurs again refuse an offer from Deborah meaden Will the remaining dragons now be Prepared to negotiate down to meet the Brothers steadfast Equity demands I agree with what Deborah's just said Okay You know just that one Act I think you know your actions was One step too far Now that could either make you a million Pound deal Or lose it yet I've just lost Confidence in you really

I'm out now Do you want to ask me if I went to Improve mother Last minute Do you want to improve your offer Having considered I've decided not to Ammo Um I'm going to give you one last chance I'm actually prepared To share the last offer that Deborah Made you And you get two dragons Um Hillary was absolutely right there's a Moment sometimes in a deal where you Think I don't want it now You made a very poor decision there I'm sorry my offer doesn't stand I'm out You've had four dragons who were Prepared to support you but we all live And die by decisions we take in life Gentlemen I'm out Jim and George leave having failed to Negotiate a deal it's not often that Entrepreneurs turn down six different Offers from the dragons [Music] Well guys had you come in with 25 as Your limit essentially we had yes we've Put so much into the business

Um so yes we we were fairly firm firm at That from the outset you could have had 25 if you hit your projections so I Think they thought you just can't Believe your own projections if you're Turning down the offer to have to have Accepted Deborah's offer it would have Been additional pressure on us but you Do believe your projections we do we do But it's just ratcheting up the pressure On us all the time whether we're Literally regretting that quite possibly [Music]

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