Entrepreneurs - Steve Smith

Businessman Steve Smith delivers a confident pitch, with his demonstration of ‘zapping’ callers causing amusement amongst the Dragons.

Deborah Meaden is keen to talk to Steve about his business’s history and financial projections. Steve’s sales forecasts, like his pitch, are confident: a modest £15,000 in 2009 rising to £1.5 million by 2012.

Peter Jones is keen to find out more about the pricing of the product and Steve is able to convince him that there are good profit margins to be had.

The Dragons quiz Steve about what other products are available and despite his obvious market research Steve fails to impress Duncan Bannatyne who feels that at double the cost of a telephone handset Truecall is overpriced. Peter Jones also expresses reservations, saying that the product is a step backward and should instead be integrated with a handset.

But, Steve counters Peter Jones’ arguments and Peter was impressed to learn that Steve has invested £700,000 of his own money into the business. Steve makes a visible impact on the Dragons when he reveals that he sold his last business in 1999 for a cool £5,000,000 and made £1,500,000 through the sale of a web-hosting company two years ago. Peter Jones admits he was almost too scared to continue questioning Steve in case it turns out he had more money than him.

Impressed by Steve’s track record, James Caan steps straight in with an offer for half the amount but for 12.5% equity. However, in an aggressive move Deborah offers Steve the full £100,000 for 12.5%.

This lead to some tense moments in the Den, with a bidding war erupting.

Duncan Bannatyne aligns himself with Peter Jones, offering to underwrite half of any offer that Peter makes. Peter himself tells Steve that with his telecoms background he adds the best value to the deal and offers Steve the full £100,000 but for 15% of the company. Peter also says he is happy to share that three ways with Duncan Bannatyne and James Caan.

In a separate development Theo Paphitis reminds Steve that he can offer him instant UK wide distribution and offers to match Deborah’s offer. Deborah responds to this by offering to share this investment with Theo.

With the Dragons now split into two rival camps Steve expresses his concern that by splitting the equity amongst the Dragons his business will be of less individual importance to them.

In a risky move with the potential to alienate the other Dragons Steve comes back to Peter Jones with a counter-offer, asking for a single investment of the full amount for 10% equity. After consideration Peter offers to come down to 12.5% equity. Steve accepts the offer.

The deal done in the Den:

Peter Jones: £100,000 for a 12.5% stake in Truecall Ltd.

Last updated: 15 July 2009