One of the Best Negotiations in Den History! | Dragons' Den

Summary

In this pitch, entrepreneur Alec Spaziano presents his leather goods business, Temporary Forevers, to potential investors on a 'Dragons' Den'-style show. He seeks £90,000 for 7% equity, showcasing versatile bags designed for professionals. Despite initial interest, the dragons critique the product's price point and quality. After negotiations, Peter Jones offers all the funding for a 35% stake, dropping to 25% upon return of investment. Alec considers the offer, valuing the partnership potential with Jones over a lower equity stake.

Takeaways

• 💼 Alex Spaziano is a Bucharest-born entrepreneur pitching his leather goods business, Brand's Temporary Forevers, to potential investors.
• 🎒 The business specializes in designing versatile leather bags for professionals, aiming to combine style with functionality.
• 🚀 Alex is seeking £90,000 for a 7% stake in his company, valuing it at approximately £1.3 million.
• 🌐 The company has successfully raised £136,000 through a Kickstarter project and has a total revenue of £230,000 in the last 15 months.
• 📈 Alex's goal is to make the brand available online and to expand into retail stores across Europe, Asia, and the United States.
• 💸 The negotiation centers around the company's valuation, with dragons expressing concerns about the price point and market positioning.
• 🔥 Peter Jones, a dragon with experience in the photography industry, is critical of the product's quality and price, ultimately deciding not to invest.
• 💡 Jenny Campbell offers £90,000 for 25% equity, a more favorable deal compared to Peter Jones' initial offer of 35%.
• 📉 Peter Jones later offers the same amount for a 35% stake, with a condition to reduce to 25% once he gets his money back.
• 🤝 After negotiations, Alex agrees to a deal with Peter Jones for £90,000 for a 35% stake, dropping to 25% when the money is recouped, valuing the company at approximately £250,000.
• 🏆 The deal concludes with Alex expressing excitement about having Peter Jones on board, highlighting the potential for growth and partnership.

Q & A

What is the name of the entrepreneur presenting in the script?

The entrepreneur's name is Alec Spaziano.

What is the name of Alec's business?

The name of Alec's business is 'Temporary Forevers'.

What type of products does Temporary Forevers offer?

Temporary Forevers designs and creates leather goods for professionals, specifically bags that can be used as backpacks, messenger bags, or briefcases.

How much money did Alec raise through Kickstarter projects?

Alec successfully raised a total of 230,000 pounds through two Kickstarter projects.

What is the current objective for Temporary Forevers according to the script?

The current objective is to make the product available online and to release retail stores across Europe, Asia, and the United States.

What is the amount Alec is asking for and what equity stake does he offer in return?

Alec is asking for 90,000 pounds in exchange for seven percent of his business.

What is the valuation of the business based on Alec's offer?

Based on the offer, the business is valued at approximately 1.3 million pounds.

What is the criticism from the dragon who exited the negotiation?

The dragon criticized that the product is overpriced for the quality offered and that it's in a difficult price point which may lead to struggles in the market.

What is the offer made by Peter Jones, one of the dragons?

Peter Jones offers all of the money requested but wants 35% of the company, with a condition to drop down to 25% when he receives his money back.

What is the counter-offer from Jenny Campbell?

Jenny Campbell offers all of the money for 25% of the business.

How does Alec evaluate the worth of his business?

Alec evaluates his business to be worth about 10 times the profit, which would be around 600,000 pounds, suggesting a 15% equity for the investment.

What is the final agreement reached between Alec and Peter Jones?

The final agreement is that Peter Jones will invest the full 90,000 pounds for a 35% stake, dropping to 25% when the money is paid back.

Outlines

00:00

💼 Pitch for Investment

Alec Spaziano, a leather goods entrepreneur from Bucharest, introduces his business, Brand's Temporary Forevers, which designs versatile leather bags for professionals. He seeks £90,000 for a 7% stake in his company, highlighting successful Kickstarter campaigns that raised £136,000 and subsequent sales amounting to £230,000 in 15 months. Alec aims to expand online and into retail across Europe, Asia, and the States. He faces skepticism from Peter Jones, who questions the valuation and quality of the products, ultimately deciding not to invest.

05:00

💸 Negotiating the Deal

Following the critique from a retail expert, Alec continues to negotiate with the investors. Peter Jones offers £90,000 for a 35% stake, with a condition to reduce it to 25% once he gets his money back. Jenny Campbell also makes an offer for 25% equity. Alec discusses valuation strategies with the investors, suggesting his business deserves a higher value based on sales and growth potential. However, the negotiations become complicated, and Jenny withdraws her offer.

10:03

🤝 Finalizing the Partnership

Alec and Peter Jones continue their negotiation, with Alec considering the implications of a Kickstarter project versus a guaranteed order. They discuss the terms of the deal, including salary expectations and the potential for future orders. Alec seeks assurance of a large order to justify a lower equity stake. Eventually, they agree on a deal where Peter invests the full amount for a 35% stake, dropping to 25% once the money is recouped, marking a successful exit for Alec with a valuable partnership.

Keywords

💡Entrepreneur

An entrepreneur is an individual who organizes and operates a business, taking on financial risks to do so. In the video, Alex Spaziano is the entrepreneur presenting his business idea to potential investors. He is seeking funding for his leather goods business, 'Temporary Forevers,' which caters to professionals who need versatile bags for their gadgets and photography gear.

💡Investment

Investment in this context refers to the act of putting money into a business or project with the expectation of making a profit. The dragons are potential investors who Alex is trying to convince to invest in his business in exchange for equity. The investment would help him expand his business and reach new markets.

💡Equity

Equity represents ownership interest in a company. In the video, Alex offers the dragons a percentage of his business's equity in exchange for their investment. The negotiation revolves around the percentage of equity each dragon is willing to accept for their investment, which determines the company's valuation.

💡Valuation

Valuation is the process of determining the current worth of a company or an asset owned by a company. In the script, the dragons debate the valuation of Alex's business, with different opinions on whether it is worth the amount Alex is seeking for his equity offer.

💡Kickstarter

Kickstarter is a crowdfunding platform where creators can raise funds for their projects from the public. In the video, Alex mentions that he initially made his products available through a Kickstarter project, successfully raising £136,000. This demonstrates the market demand for his products and serves as a proof of concept.

💡Retail

Retail refers to the sale of goods to the public in relatively small quantities for use or consumption rather than for resale. Alex's business plan includes making his products available in retail stores across various continents, indicating his ambition to scale up his business.

💡Leather Goods

Leather goods are products made from leather, such as bags, shoes, and accessories. Alex's business, 'Temporary Forevers,' specializes in leather goods designed for professionals who need to carry their gadgets and photography equipment. The bags are described as versatile, reflecting the style and character of the users.

💡Negotiation

Negotiation is a process where parties discuss and resolve issues in order to reach an agreement. In the video, Alex engages in negotiation with the dragons to secure funding. The negotiation involves discussing the value of his business, the percentage of equity he is willing to give up, and the terms of repayment.

💡Profit

Profit is the money a company has made after subtracting all its costs from its income. In the script, Alex mentions that his business has made approximately £65,000 in profit, which is used as a basis for the dragons to evaluate the company's performance and potential for return on investment.

💡Market

A market refers to the customers who might be interested in a product or service. The dragons discuss the market for Alex's leather goods, considering factors such as the quality of the product and the price point. They also consider the potential for growth in the market for men's leather bags.

💡Exit

Exit, in the context of business, refers to the strategy by which investors dispose of their investment in a company that they previously financed through a private transaction. One dragon, Tuco Suleiman, decides not to invest and 'exits' the negotiation, leaving Alex to continue negotiating with the remaining dragons.

Highlights

Alex Spaziano seeks £90,000 investment for 7% of his leather goods company, Temporary Forevers.

The brand focuses on versatile leather bags designed for on-the-move professionals, offering multiple carrying styles including a backpack, messenger, and briefcase.

Temporary Forevers raised £136,000 in its first Kickstarter project and £230,000 in total revenue over the last 15 months.

The company's objective is to expand online sales and enter retail stores across Europe, Asia, and the United States.

Peter Jones questions the company's valuation of £1.3 million, comparing it to his experience in reviving the photography brand Jessops.

Alex explains the name 'Temporary Forevers' as representing cherished moments that are temporary but remembered forever.

Sales in the last 12 months totaled £140,000, mostly from Kickstarter, plus £25,000 from online sales.

Touker Suleyman, a retail tycoon, criticizes the product pricing, claiming the bags are overpriced and of mediocre quality. He declines to invest.

Peter Jones offers all of the money but requests 35% equity, later agreeing to reduce his stake to 25% once his money is repaid.

Jenny Campbell makes a competing offer for all the money but requests 25% of the business, which Alex ultimately declines.

Peter Jones argues that the company is a startup and shouldn't be valued at the £600,000 that Alex proposes based on profit multiples.

Alex attempts to negotiate with Peter, proposing 20% equity after repayment, but Peter insists on 25%.

Deborah Meaden withdraws her offer, sensing Alex's focus on securing Peter as his partner.

Alex expresses concern that Jessops' limited geographical reach may not offer the sales impact he desires, despite Peter's confidence.

After a final negotiation, Peter guarantees a large order for the company, leading Alex to accept Peter’s offer of 35% equity, dropping to 25% after repayment.

Transcripts

first into the den is bucharest born

alex boozy our new an entrepreneur

primed to defend his enterprises price

tag he's stuffing gonna be exciting I

hope they're not gonna beach itself with

me on the evaluation and there are two

dragons in particular he wants to

impress I haven't decided yet which one

would be the best of c2 crystalline has

the experience in my field but Peter is

definitely a very influential person he

would help my presence tremendously

influential yes but notoriously fiery

when it comes to a company's valuation

hello dragons

my name is Alec Spaziano and I'm here to

offer you the opportunity to invest 90

thousand pounds in exchange for seven

percent of my business the brand's

temporary forevers we design and create

leather goods for today's on the move

professionals that wish to carry the

essential gadgets and photography gear

in a bag that is flexible and reflects

their style and character we bring an

added versatility that is not found

among other products on the market the

bag that I have with me is the first bag

designed with two different faces one

that we carried as a backpack and the

other as a messenger or briefcase

this makes ideal for the commuters that

want to cycle to work carrying a

backpack picking out a messenger and

then they can take the straps off and

walk to their meeting in a professional

looking briefcase we first made our

goods available in December 2015 through

a Kickstarter project and we

successfully raised 136 thousand pounds

since then we've had another successful

Kickstarter project bringing in a total

revenue of 230,000 pounds in the last 15

months our objective this year is to

make a grid available online and to

release retail stores across Europe Asia

and the States

thank you for your time and I'd like to

show you some of the bags possible

luxury travel laptop and camera bags of

the proposition from Alex Busey Arne

yeah he's offering just seven percent

equity in return for a 90 thousand pound

investment which values his business at

nearly 1.3 million pounds is Peter Peter

Jones revived the fortunes of ailing

photography brand Jessup's will he think

this business opportunity is

picture-perfect

wife temporary forevers that's a really

odd name the reason that is because it

comes from the moments that you cherish

and you remember they're temporary but

they last forever so is this a temporary

forever moment for you of course it is

enough for you as well

I don't I don't know what have been the

sales in the last 12 months 140,000

coming from the Kickstarter project plus

approximately 25,000 from online sales

okay so you basically sold a hundred and

sixty-five thousand pounds worth of

product yes

and you're very specific about ninety

thousand for seven percent yes why

considering that we have had

approximately 65,000 in profit I think

it's a fair price would you agree no I

know thinking through my bags you do

here and this one here for instance

retails for how much it retails at 2:45

to prefer it's quite expensive yes

you're not at the low end no there are

some very very good imitation levers

that you put next to each other you

won't even know it it's limitation lever

okay say something sure it's like having

a Lamborghini with a Renault engine so

although on the outside it may look

great it's not the same thing yeah but

it's a different price point you know

what I'm trying to say to you is you're

at that mid price point which is a very

difficult price point I actually I think

a price point is probably okay depending

on the quality of the product you know

be prepared to pay you know for the

leather I love leather goods satchels

backpacks in class

I don't want to wear a bag that's a

nylon material I like leather it looks

looks good the quality and I think it's

a massively growing market for men for

men exactly absolutely so that's all

good Alex

I know this area very well your products

over price or what it is

I think the quality's mediocre this

price range you're gonna struggle and

struggle big and I'm not gonna invest in

you for that reason and I'm out thank

you a skeptical Tuco Suleiman makes his

exit has the retail tycoons criticism

torpedoed the entrepreneurs chances with

the rest of the den Alex the fact that

toukas in this market and knows it well

and has told you that basically doesn't

think it's gonna amount to much it was

interesting because you have to take

that on board it's a tough business and

coming in at 90 K for 7% I think you

make it harder but you're a very very

very investable individual thank you I

can see a big opportunity if I was to

help you put this into Jess its

overnight not only would we prove to

Quran we proved terror on as well

because you said you wouldn't get into

retail in fact you could get into retail

in the next two minutes Alex I am going

to make you an offer

[Music]

but I want a decent-size return so I'm

gonna offer you all of the money but I

want 35% of the company would you agree

with me that valuing the company at

approximately 250,000 pounds is too low

no because I've it for about 200,000 I

introduced a brand that's doing just

over a million pounds worth of sales in

this type of market we are pretty much

experts in that field thank you thanks

for the offer a bullish offer from Peter

Jones one of Alex's preferred dragons

but he's demanding a hefty 28% more

equity than the entrepreneur wanted to

give away slashing the value of his

company by over a million pounds is

Jenny Campbell poised to up the ante the

valuation over a million yeah where's

that derived from I I believe that

everybody likes to negotiate a bid so if

I came with the most reasonable offer I

think you're very very persuasive

so I will make you an offer for all of

the money for 25% of your business

thank you I'd like to ask Peter I think

my business is worth about 10 times the

profit if I evaluate it so that would

bring it to about 600,000

which would be 15% is that a fair way to

evaluate it no no because you're a

start-up and I wouldn't even value it

potentially at half that but because

it's a start-up he has the growth

potential

it does but you're asking me would I

value this at six hundred thousand I

clearly wouldn't I did come here

thinking that my max would be 15% but I

would really hope and appreciate if you

took into account and accept is 20% I

think it's a large enough sum to be

interested would I get my money back

absolutely

I tell you what I will do I would offer

you all of the money for 35% and I would

drop down to 25% when I receive my money

back

would you consider accepting 20% when

you get your money back I think that's

more than fair

[Music]

Alex I wouldn't know it's got to be 25

Alex let me just tell you where I am

because clearly the negotiation is going

on with OJ it's clear that you're

targeting pizza for this investment and

for that reason and which withdraw my

offer and say that's a mouth

sorry I'm sorry freeze trying to be do

too much thank you thank you one deal

summarily taken off the table leaving

the entrepreneur at stalemate with Peter

Jones Alex why don't you go to the back

of the room and think about it will he

accept the Dragons offer of all the

money for a 35% stake

[Music]

dropping to 25% when he gets his cash

back my worry is because Jessup's is

only in one country we wouldn't have

enough sales to have the impact that I

would want if we have a Kickstarter

project that does reach above two

hundred thousand pounds would you be

willing to go down to 20 percent don't

know is it the five percent I don't

understand Alex why you would go for a

Kickstarter project when next week you

get an order for two hundred thousand

pounds

you don't need Kickstarter if you've got

a fire starter if you do place an order

of two hundred thousand would you be

able to guarantee that and now accept

25%

do you know what I like the way you're

negotiating but I won't if we do a deal

I want us to realize that that's a

partnership I wouldn't want to go

through a relationship where we end up

negotiating anything

one last question would I have a salary

including this a reasonable one

what's your reasonable salary with a 30

B okay

you won't 75 percent at this company

well my money's repaid so you could be

earning a lot more than that you would

in fact guarantee that you would place

that order I'll guarantee that we have a

deal please for your patience

great welcome to negotiation you guys

finally after a hard-fought battle on

both sides

Alex exits the den where the deal I

would have preferred if it was 20% but

it feels amazing to have Peter Jones on

board right now I really like him I'm

generous thank you I'm really excited

you

you