Gousto’s Angel Investors Cause Difficulty In The Den | Dragons’ Den

Thank you Hello this is James and I'm Teemo we're Here today to ask you for one hundred Thousand pounds in return for seven Percent of equity Do you find it difficult to cook healthy And delicious meals during the week Writing a shopping list going to the Store and carrying home heavy bags can Be pretty time consuming every week we Design 10 new recipes for you to choose From to cook according to your Preferences everything is then delivered Straight to your door in the exact Portion sizes So there's absolutely no food waste This concept originated in Sweden five Years ago since when it has grown Rapidly with currently one percent of The Swedish population using this Concept If you translate that across to the UK One percent of the UK population is Equivalent to a 750 million pound Market Opportunity We are currently delivering 1 500 meals A month and our customers on average Spend 50 pounds per order To reach Break Even we need to deliver 12 000 meals a month which we expect to Achieve within one year Thanks very much we'd now like to invite One of you to prepare our smoked trout Salad meal

Um of course if if none of you would Like to do it me and T-Mobile prepare it While we take your questions I Absolutely don't want to do it I'm Cooked in 28 years I'll do it sure great fantastic An accomplished pitch from the boys Behind Gusto they're looking for a Hundred thousand pounds for a seven Percent stake in their gourmet meals Home Delivery Service do I get a Different Um I can give you mine yes I think you Should sure How could it be in the kitchen without My effing on It's Duncan bannatyne gets to grips with The ingredients Deborah meaden wants to get a taste of Their business model where are you Sourcing products from so we've got a Fish monger in Scotland we've got a Farmer in Devon supplying the meat the Veg comes from Somerset canned mainly From the UK not not entirely but mainly It's all organic All these ingredients become separate Bottles marked absolutely yeah so it's Labeled you know exactly what it is Through that time scale how quickly do I See that box on my doorstep so at the Moment on a Wednesday you um choose the Recipes you like to eat then on Thursday We place orders and then we deliver to

You next week all right so this is a Planned activity so what happens when Somebody tries to deliver and there's Nobody there is that has that happened To you yet our delivery success rate is 99 at the moment so on average one Percent of unsuccessful deliveries but That's an acceptable margin to us that Is not just an acceptable margin that's An excellent margin Foreign So far so good the food's going down Well with the dragons and the Entrepreneurs are keeping their cool Foreign Wants to know if their balance sheet is As convincing as they are What are your overheads do you you're in A kitchen or a warehouse or the main fix Costs are the um rent for the warehouse And our office so for the warehouse it's Um approximately 3 600 pounds a month And then we also spend about uh close to Two thousand pounds on the head office As well how are you funding now so to Date me and Timo each invested at 75 000 Pounds each individually and we've also Raised um 130 000 pounds from uh friends And family it's all gone nope um we have Uh about 90 000 pounds left over at the Moment you're losing money at the moment Yes we are how much you're losing And at the moment Um 25 000 pounds a month

James Tim I'm Kelly Um I worry about the fact that it's not That spontaneous I might want a pizza One night or something else So you repeat it if it's gluten-free All I'm saying is every time I've had One of those boxes delivered yeah with With Organic vegetables in I've ended up Wasting a lot I don't know why one of The key points I'd make to that if I can Jump in is that um quite often with Those vegetable boxes Um the thing that's missing is that Extra step where it's made really easy For you to turn that into a fantastic Recipe which I don't think you'll ever Be in that situation where the Box Arrives and you don't know what to do no And I think it's it's great that you're Showing somebody how to cook it the Biggest issue is you're losing a huge Amount of money every month and that Doesn't show me that you're a great Investment there's obviously to set up This business there is a a small level Of fixed costs which we need to start Off with and um Loss a month I don't consider a small Level To establish a supply chain to do the Fulfillment to guarantee the 99 Um tell me about it I run businesses I Understand that's 25 000 Pounders don't Like um as you describe that as a small

No no A lot of money to be losing a month In the bank you've got you've got three Right now you've got three months ahead Of you You are not asking for anything like Enough cash It sounds like I've just stumbled across Something quite important there Absolutely um probably should have Mentioned it earlier we have 90 000 Pounds um in the bank at the moment we Are in a very Advanced stages of Negotiation with um some other angel Investors who are going to invest 250 000 pounds in the business for what Percentage so they are investing um 250 000 pounds for Um 23.4 of the business Den as Teemo and James reveal that other Wealthy investors are prepared to inject A serious amount of money into their Business Peter Jones wants to find detail So who are these Angel Investors we Can't disclose the names on TV however Um they three guys they each spend 30 Years in the food and warehouse and Logistics industry as CEOs chairman of Listed food companies of the largest Companies in this country you're saying You can't say who they are Um if you're going to have a chance of Getting me as an investor

You're going to have to disclose who These people are because I wouldn't want To get involved in a business where I Don't know the other partners Um is that something that we could we'd Like to ask their permission listen You're not on who wants to millionaire You can't phone A friend is it under Term ship yes it is Yeah I'll have the term sheet then you Go out the Clipper dragons here to help You out here oh be quiet granddad [Laughter] Guys you've done really well [Music] An unexpected reaction from Peter Jones Who seems impressed by the caliber of Their angel investors But as Piers Lenny smelt a rat About the motives of the entrepreneurs For coming into the den in the first Place Why are you here Really why are you really really here You guys I know you guys I know where You're coming from you can raise 250 350 500 probably through those guys or if They like you their mates you know it's It's not a stretch are you here because It's the pr value of it I'm just trying To understand because not just two Reasons number one is on the cash side Um at the moment it is a highly cash

Intense business the other thing which Would really value from you coming in is Um on on the marketing side and also It's always good to have another Strategic Um voice in any uh well we're never Making any strategic decisions Still don't think I will be staggered if you're not Looking at Millions not 250 000 pounds I Won't be investing and I'm out thank you I think you're both great anything to do With Organic delivering you know the Packaging is great but I think that People like change there's so many new Brands and things happening and I think It's human nature that people don't want The same thing all the time I think you Will Hemorrhage money and a hundred Thousand pounds from one of us and then 250 from your angels I think you should Take stock and think about where you are It's just not something that I would Invest in Sorry but I'm out I really like this But I think you've come through the door With a shopping basket with too many Things as complicating this I'm afraid I'm also out Concerns over cash flow and Gusto's Company structure have led to Three Dragons turning down the offer to invest Now Peter Jones wanted to find out if

The deal struck with their angel Investors leaves any room for maneuver What happens if I get A really good negotiating position in The den here And then when we walk out the investors Turn around and say that Peter Jones You've given away all of that I want the Same deal what happens Um well I guess because it might we have That deal on the table Um we are There's not much room for us to Negotiate outside of that that term Sheet there because we wouldn't want to Jeopardize the the deal which we already Have Well you've just made my my decision Then Um Which is really really disappointing Because I think you've missed a trick By making that statement Angel Investors are a group of Individuals that look at businesses and Put money into it in the hope And the women fantasy that maybe one day They'll make some money I'd like to think of myself as very Different I'd like to think that I'm a Very serious investor that gets involved In every business I don't sit on the Sidelines I make a real difference in The company then you bring the marketing

In PR and bang it doesn't get better Than a dragon so to tell me that I'm Going to be at the same level As some very wealthy angel investor that Frankly will play no part in your Business It doesn't do it for me Um can we discuss quickly you can go to The back near the lift and have a chat Twenty percent Of 12. Um could we ask um if if you would like To make an offer what um what what level Would be uh satisfactory to what would Well I'd like just you went to the Record room to think about The Dilemma that I gave you which was That if I was to get an offer today that Was a lot richer in terms of equity than The investment that you've been offered Through this Angel Network would The Angel Network walk away We probably can't agree to a deal that Is a lot richer Guys I think that what you've created is Is potentially great and I think you've Been very open about your angel Investment Network and I think it would Shut the door to Future funding so I'm Going to say reluctantly I'm out Okay thanks A perturbed Peter Jones walks away from The deal it leaves Duncan bannatyne as

The Last Dragon standing I really love this I think it's absolutely fantastic I'm going to become a customer that's Good I'm going to buy your products brilliant And when I go in the summer with my lad To my cabin a little Windermere I'm Gonna have your boxes delivered and We're going to sit and cook together And it's going to be fantastic I love it It's fantastic Unfortunately I don't think you'll ever make any money I can't see ever committed profit So for that reason I've got to say I'm Sorry but I'm out thank you thanks Despite the dragon's enthusiasm for Gusto a combination of their monthly Losses and a rigid arrangement with Other investors means that Teemo and James walk away with nothing Greatest time to Hamstrung by what we've already Negotiated [Music] [Music]

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