A former Shutford landlord who sold the pub to sell his spiced rum got a firm rejection from the millionaires of Dragon’s Den on Sunday.
Paul Stanley, who ran the George and Dragon, made the fatal mistake of giving the dragons a less favourable valuation for his product, Cloven Hoof, than two drinks company executives.
Mr Stanley featured in the first episode of the new series of Dragon’s Den on Sunday asking for £50,ooo for a five per cent stake in his business - valuing the company at £1 million.
Making a big entrance with a Stafford rock band called Ryder’s Creed he said: “The dragons don’t know what they’re going to be hit by today.”
But while being questioned he confessed to having given two senior drinks company bosses a 25 per cent stake at a valuation of £250,000 - a quarter of that offered to potential investors Peter Jones, Tej Lalvani, Deborah Meaden, Touker Suleyman and new dragon, Sara Davies.
While they liked the drink, the five were not impressed and all rejected Mr Stanley’d pitch.
“Cloven Hoof was created by me in a pub I owned in north Oxfordshire... In 2008 it had a turnover of £300,000 and I then put a chef in and it went downhill. The opportunities for Cloven Hoof became bigger than the pub,” he said.
Asked about his business acumen he said: “I was a good pub landlord who could have done better.”
Sara Davies warned Mr Stanley that he was going to have to be good to make a success of Cloven Hoof in an ‘overcrowded market’ since he had let one business slide.
Peter Jones asked for the last year’s sales figures which showed a net loss of £17,000 making a loss of £70,000 to date. But Mr Stanley said he hoped to turnover £275k in the coming year making a net profit of £45k out of which he would take a salary.
Peter Jones reminded him that this meant his net profit would be zero.
Mr Stanley responded saying he intended to release more equity next year and crowdfunding to ‘raise a bigger dollop of cash and scale up even more’.
“A Dragon would add weight and make it more robust,” said Mr Stanley. Mr Suleyman said he did not want to be used for crowdfunding and Mr Stanley said that he may not be the ‘right dragon’.
He then revealed his deal with two ‘very senior’ executives of drinks firms who have ‘chucked a big dollop of cash - £56k - into the bank account’
The dragons realised the enormous difference in valulations and one by one they said the fateful words: “I’m out.”
“Why didn’t you pitch to that amount when you came in?” asked Peter Jones. Mr Stanley reiterated the superiority of his new investors.
“That pales into insignificance compared to a Dragon,” said Mr Jones.
“I’m not sure it does - these are drinks experts,” said Mr Stanley.
Sara Davies said: “You didn’t truly value what one of us could have added to your business. That switched me off. I’m out.”
As he left the den, Mr Stanley admitted to having ‘messed it up a bit’. The newest dragon called him ‘naive’.