- Innovative snack brand Sea Chips did the unthinkable when they turned down investment from Dragon's Den. Here, co-founders Dom Smith and Daniel Pawson explain how they went about finding the right investor for them - and the importance of getting the perfect fit
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Why did you turn down Touker Suleyman on Dragon’s Den?
I didn’t feel that Touker was a good match for us, and with the exception of the money he had offered, I didn’t believe he could give us more support and knowledge from experience than Jonathan Brown who had put an offer on the table before we entered the Den. When you’re pitching to the Dragons you get a sense of which of them truly understands your business and whether it’s something that excites them. We were aware that our product was not going to be for everyone but when one of the Dragons who I had imagined accepting an offer from said they were out I knew I was going to be leaving the Den empty-handed.
Would you recommend seeking investment on shows such as Dragon’s Den?
Looking back, appearing on Dragon’s Den was a great opportunity for us to pitch the business to successful investors and gauge their reactions, not to mention the fantastic exposure that being on the show gives you. Even if you don’t get an offer, hopefully there are potential customers watching who are intrigued and go on to buy your product, or even other investors who want to get in touch. Walking away without a Dragon doesn’t mean the end of the road, it could mean it’s just the beginning.
How did you go on to secure the backing of strategic investor, Jonathan Brown?
At the time, Jonathan was mainly based in Miami, USA, but he had seen the progress we were making in the UK. As one of the world’s largest producers of smoked salmon he had his hands on a lot of wasted salmon skins from his own product. He got in touch with us through Instagram to see if we could work together to bring the crisps to market in both the UK and the US by using the skins that had previously been going to waste. Jonathan already had the manufacturing experience and the supply, and we had a strong brand that had started to make a name for itself, so it seemed like the perfect partnership. Once Jonathan and I met, we got on really well and by the end of the meeting I asked if he’d be interested in coming on board as a business partner, not just to provide the salmon skins. The rest is history!
Although Instagram may sound like an odd way to initially meet an investor, I think it goes to show that if you focus on making some noise early with minimal funds - we got Sea Chips off the ground for about £5000 - the right people will find you. We could have gone out there and raised money from wealthy people but what we really needed was guidance and connections, not just cash.
Why was this decision crucial to your business growth?
We were making the crisps from a small production kitchen which took a lot of time and meant that we couldn’t really produce a consistent product or be out there selling and growing the brand. We looked into how we could upscale with extra money but we simply didn’t have the knowledge in manufacturing when it came to health and safety or accreditations that are needed to sell to supermarkets. We were also still paying to get the skins prepared and shipped to us from fishmongers whereas once Jonathan was on board, we were able to get his production team to redirect the skins to the Sea Chips site. This meant that we could get the salmon skins for free which in turn allowed us to sell our crisps at a more competitive price, all of which helped us to get our product onto the shelves of listings such as Sainsbury’s.
When is the right time to look for an investor?
You need to show that there’s something worth investing in, so if you’ve got one or two listings already it can make it easier to prove what you are able to achieve so go as far as you can without an investor. By the time you’ve started to look, you should have a strong belief in your business. Focusing on expanding your brand and developing your product as well as investing yourself fully is paramount to the success of your business and therefore finding the right investors. You might be working a full-time job at the same time, and you don’t need to quit this immediately, but if you are getting good feedback from your target market and buyers seem keen, look at the possibilities of immersing yourself completely into your brand. This will help when it comes to proving the viability of your company to investors.
What advice you would give to other start-ups looking for the right investor?
These days you can raise finance relatively easily, but in my opinion, you want to make sure that the investor has been there and done it, so make a list of the top 10 most successful entrepreneurs in your category and approach them. This way you won’t be receiving constant emails from an angel investor who wants continuous updates but doesn’t necessarily understand the situation that you’re in.
There’s also the opportunity of pitch competitions and we can vouch, the value of them are second to none. We pitched at FoodBytes! by Rabobank in September 2018 and the connections it brought are intangible. Even though we were not desperate for an investor at the time, the calibre of the contacts and corporates in the audience were very high and provided us with an invaluable platform to communicate what we are working to achieve. We are still a member of the FoodBytes! alumni and they offer us on-going support and connections.
Ideally you would have contacted dozens of potential investors when you are ready however, if you only get one offer and it doesn’t feel right, don’t accept it. My advice would be to find the courage to hold on for as long as possible. We had many opportunities to take investment, and there were times when we almost did simply to get the task off our shoulders, but I always thought we’d be able to find a better fit for us, and we did!
Image credit: Joe Horner
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