Infighting, tax evasion and dodgy deals: The dark reality of Dragons' Den

Many entrepreneurs have been left battered after appearing on the hit BBC series. Are the show's days numbered?

Last Updated: 20 Aug 2020

A star of the show once tried to buy a baby. Another branded his wife a gold-digger in front of millions. A further character stood accused of using public money to fill his company coffers. These tales of infighting, tax evasion and dodgy deals are not based on the antics of JR of Dallas fame. This is real life, playing out on the hit BBC series Dragons' Den.

Part investors, part pantomime villains, the BBC's 'Dragons' are as colourful as they are incredible. You don't have to dig very deep to find dirt. Take gym entrepreneur and fiery Scot Duncan Bannatyne, whose financial woes have been played out endlessly in the media. The small issue of a £122m debt to the collapsed Anglo Irish Bank last year got him booted out of the Sunday Times Rich List, yet he has managed to hang grimly onto his spot on the show.

Bannatyne's high-profile divorce turned into a soap opera amid the Dragon's claims on Twitter that his ex only married him for his money. And his own brother Sandy became a member of the 'I hate Duncan Bannatyne society' on Facebook, after the Dragon insulted his Scottish family in his autobiography.

When Sandy Bannatyne joined the forum in 2012, he posted this cutting message: 'Such an excellent group and I'm proud to be his first family member to join.'

James Caan left the show following bad publicity after his thwarted attempt to buy a baby from a starving family in Pakistan in 2010. Caan even managed to alienate Bannatyne when his non-domiciled-resident tax status was revealed. He became an instant persona non grata on the show, with Bannatyne vowing never to invest alongside him.

Another Dragon's charity, the Peter Jones Enterprise Academy, allegedly paid out huge sums in taxpayers' money over three years to Jones's companies in exchange for services rendered. The charity's chief executive, Tom Bewick, resigned his post after only weeks in the job, claiming that the millions of pounds of public expenditure were 'hard to justify'.

Jones denied this and business secretary Vince Cable set up an inquiry, which found the allegations to be 'unsubstantiated'.

And even its genial presenter, Evan Davis, has attracted his share of headlines with rumours of exotic piercings.

But none of this has stopped the Dragons' Den juggernaut, which is still going strong after almost a decade. The BBC stalwart offers up-and-coming entrepreneurs five minutes of fame during a primetime TV slot, and those few minutes have proved invaluable for countless businesses. Visit the website of any previous contestant and 'as appeared on Dragons' Den' is brandished on the homepage, whether the company received investment or not.

There's no denying the power of the series. It has created a new cabal of entrepreneur celebrities. Who knew the names Duncan Bannatyne or James Caan before they appeared on the show? Even Dragons who left the Den years ago are still lunching out on the show's popularity. Rachel Elnaugh was forced to leave after just two series when her experience business Red Letter Days imploded, and still describes herself as an ex-Dragon on her Twitter profile, as does 'former Dragon of Dragons' Den' Doug Richard.

But the allure of the Den is still a mystery to some. While many entrepreneurs describe the pitching process as educational, all admit that it bears very little resemblance to a meeting with regular investors.

Captive Media attracted derision in the Den because it creates interactive branded content on proprietary screens installed in urinals.

'They just kept going on about how it was a peeing game,' says co-founder Gordon MacSween. 'I was never able to move the conversation on because they were locked into the novelty of it. You don't get professional investors trying to come up with killer one-liners when you're pitching, scribbling put-downs while you're answering a question.'

'I had to review every inch of my business, conscious that the Dragons might try and catch me out on something,' says Amer Hasan, founder of cab price comparison and booking app minicabit, of his recent appearance on the show.

'They liked us for the first 20 to 30 minutes, then it started going wrong and it turned into the interview from hell,' adds Steve Tonkin, co-founder of log-cutting sawhorse firm Truncator. 'When we stood up for our sawhorse and argued with them, they did not like it. To be honest, from that point on, we did not want them either.'

The contestants on the show are all seeking investment, but the majority are also looking for mentoring and advice. Therein lies the problem. The success of the format rests on how well the Dragons make the entrepreneurs squirm. How can you establish a relationship of trust with an investor who has spent the first few hours of your meeting tearing strips off your business for entertainment value?

'Hilary (Devey) launched a personal attack with no comment of any kind about the business,' says Captive Media co-founder Mark Melford. 'In my view, they don't care about the companies. They are just trying to build a career on TV.'

The allure of the Den is still a mystery to some.

There have been some notable successes. Levi Roots and his jerk sauce company, Reggae Reggae Sauce, were propelled to stardom following his heartfelt, tuneful pitch in the Den in 2007. The sauce is now stocked in all the major multiples in the UK.

Richard Blakesley and Chris Barnardo raised investment for their magic wand-like universal remote control in 2010. Bannatyne gave the pair £200,000 in return for 30% of their business, the Wand Company. The firm's Kymera wand was featured in the latest series of hit US TV show The Big Bang Theory and the company is the manufacturer of a Doctor Who Sonic Screwdriver.

But for every success story, there is a long list of entrepreneurs who, in spite of being summarily rejected in the Den, have gone on to make millions. Most notably, Rob Law, inventor of kids suitcase company Trunki. He now turns over £7m a year, even though he was dismissed on the show.

MT caught up with two start-ups that were ridiculed in the latest series, only to go on to achieve considerable success. Julie Wilson and Amy Livingstone are the founders of Cheeky Chompers, maker of a chewy dribble bib.

'They thought our forecasts were "delusional",' says Wilson. 'Well, we are now being sold in eight national retailers, including John Lewis, JoJo Maman Bebe and Waitrose, and in year one we have distributors in 14 countries.'

'Bannatyne did say if we met our three-year targets, he would eat 100 of our bibs,' adds Livingstone. 'We have exceeded year-one projections ...' MT hopes that Bannatyne's gnashers will be up to the task.

Dr Ganesh Rao [pictured right] of Treatment Saver, a comparison website for laser eye surgery, cosmetic surgery and beauty clinics, was shocked by the Dragons' apparent ignorance of the price comparison market. 'There were some quite ridiculous reactions that showed just how out of touch some of the Dragons were,' he says.

'Duncan Bannatyne said that price wasn't important in making a decision on treatment. Maybe if you're a millionaire, you can look up the most expensive doctor on Harley Street and head down there, but if you can get the same treatment cheaper on a website such as ours, why wouldn't you?'

Treatment Saver attracts 50,000 visitors each month and has saved its customers more than £1m on treatments in the past year. 'They didn't get what we were trying to do or care that the business was profitable,' adds Rao. 'We only realised halfway through that some of their reactions were just being unnecessarily exaggerated for TV.'

And while Steve Handley, the Beeb's Dragons' Den series producer, claims that around 20% of businesses that pitch on the show secure investment, there is evidence that many of the entrepreneurs don't actually get the money.

According to recent research by alternative finance provider, which interviewed 553 previous contestants, more than a third of businesses that received an offer from the Dragons found that those deals later fell through for contractual reasons or because the Dragon retracted the offer.

It's not just the Dragons who are refusing to sign on the dotted line. Start-ups are increasingly rejecting offers in the Den in favour of bank funding or other cash sources.

Bedlam Puzzles entrepreneur Danny Bamping accepted and later rejected an offer of £100,000 for 30% of his company, instead preferring bank funding. James Roupell, founder of toy-come-backpack company Bobo Buddies, recently turned down all five Dragons in favour of a loan that sacrificed zero equity.

Investing cash in start-ups carries a high risk and these deals must be priced accordingly, but scores of entrepreneurs have gone on to prove that their firms were undervalued.

'Peter Jones told us that our £2m valuation was ridiculous,' recalls Captive Media's MacSween. 'Clearly it wasn't, because we got double that a few weeks later.'

Minicabit's Hasan received offers from Deborah Meaden and Jones that he later turned down. 'Their deal seriously undervalued the company,' he says.

The investments on Dragons' Den have also been called into question, with many entrepreneurs later realising that they have been offered a loan, or a complicated structured product, rather than just a venture-capital deal.

The Dragons may finger wedges of cash during the pitches, but this is all an illusion. Some may remember the story of Talpa Products and its MagnaMole, a plastic rod that takes cabling through cavity walls without risk of electrocution.

Founder Sharon Wright won an £80,000 investment in 2009 from Bannatyne and Caan to help expand her business. 'I didn't receive the monies I expected, I didn't receive the support I needed and, more importantly, they were charging me for their services,' she later claimed.

After asking a lawyer to explain the contract to her, Wright claimed that the Dragons had bought nearly a quarter of her company for £29 with the promise of 'loaning' her up to £80,000. In signing the contract, Wright had also unwittingly agreed to pay the two Dragons a fee for their support, while cutting her own salary from £50,000 to just £12,000. She managed to extract herself from the contract, but says that she later suffered a nervous breakdown from the stress.

The Dragons themselves have at times called the programme's authenticity into question. YO! Sushi founder Simon Woodroffe lasted just one series before deciding to jump ship. He spoke of his distaste for the way entrepreneurs were treated on the show.

'The show became a battle of egos - not a forum for business innovation,' he said in an interview with the Daily Mail. 'The thing to remember was that when you walk up the stairs to pitch, it's not five people necessarily thinking, how am I going to be able to make an investment here? They're also thinking, am I going to be the star of this next little piece? That's not how I was told the show would go down.'

Poor old Richard Farleigh was on the receiving end of the show's superficiality, allegedly being ditched because he was white. The producers allegedly wanted to find an investor who represented an ethnic minority.

'It would be disappointing if that was the reason - rather than anything fundamental - that I was the wrong colour,' he said at the time. 'I don't know why this has happened and I am very disappointed and bemused. I wasn't expecting it, because all the feedback I got was very positive. I had even moved back to the UK to focus on commitments for the show. I am gutted that I have not been invited back.'

The cracks are now starting to show, with high-profile entrepreneurs revealing that they never intend to take part in the show. According to lingerie entrepreneur Michelle Mone, who founded Ultimo, she has turned down offers five times.

When Dragons' Den launched in January 2005 (it is based on a Japanese version - not Takeshi's Castle, surprisingly), the show ushered in a new era of celebrity entrepreneurs, with Suralan's star turn on The Apprentice following hot on its heels. It is credited with raising the profile of business across the UK. But at what cost?

According to research from the Centre for Entrepreneurs, chaired by serial entrepreneur Luke Johnson, three-quarters of business owners are critical of business shows such as Dragons' Den.

'The shows portray entrepreneurs in a caricature way,' Johnson said on the BBC's Today programme. 'I think that's unfortunate, because it can be off-putting and it discourages. Ideally, what we should be doing is inspiring more people to start a business to help create growth.'

A further survey conduced by asked bosses at 200 companies if they believed the shows offered an accurate portrayal of the business world and, again, 75% said that they do not, and 52% stated that BBC business shows were more concerned with sensationalism and creating celebrities than educating aspiring entrepreneurs and the wider public about business practice.

Some of the Dragons' Den hopefuls interviewed by MT say that despite being rejected or offered a bad deal, the experience was positive for their businesses because of the publicity generated.

Truncator's Tonkin comments: 'The coverage we have had has been amazing and it has been a great icebreaker at every trade show and demonstration we have done since appearing on the show. There has been an amazing amount of support for us too. Lots of people have said how they liked us for standing up to the Dragons and not backing down.

'We sold two months' worth of stock in the two weeks following the show and the phone did not stop for a month.'

However,'s research showed that two-thirds of entrepreneurs found that their Dragons' Den appearance had not helped them source outside funding.

'We got some PR but, overall, the impact was neutral,' says Captive Media's MacSween. 'And when we spoke to real investors about appearing on the show and warned them that we might not be painted in a positive light, they completely discounted the opinion of the Dragons.'

The influence of so-called celebrity angels is now also being threatened by the emergence of countless new forms of alternative finance. Who needs three minutes of fame on BBC2 when a cleverly edited video on a crowdfunding site can go viral in hours?

While Dragons' Den can attract as few as 1.5 million viewers, US-based crowdfunding platform Kickstarter receives 9.9 million visits a month globally, according to Quantcast. These aren't passive visitors: they are armchair investors, pumping in $1bn of funding since the site's launch in 2009. Its most funded project, the Pebble smartwatch, received more than $10m in funding from 69,000 backers. The largest investment ever made on the Den was £200,000.

While Dragons' Den may be an easy way to get your product or service on TV, the pitfalls of appearing on a hackneyed show with self-interested investors and 'if it bleeds, it leads' editing are fast outweighing the benefits.

And with the rise of crowdfunding and the fast-eroding credibility of so-called celebrity angels, the death knell could soon sound for Dragons' Den.

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