Last week, Dragons’ Den, the BBC show which lets budding entrepreneurs pitch their business and/or ideas to investors, featured British jeweller Clive Billings from diamondgeezer.com.
The recording of the show can be viewed below:
In a nutshell, Clive wanted to sell a 15% stake in his company for 255,000 pounds, in order to expand the business to target the lower end of the jewellery market – between 25 and 500 pounds, or as he called it, the “click and buy” market. This represents an entirely different market to what diamondgeezer.com are currently targeting, and that is the $5000+ diamond engagement ring market.
After two rejections from the first two “dragons”, the last three dragons offered the money Clive wanted, but for a 40% stake in the company. The dragons also seemed to want a large personal guarantee from Clive, and by the time they made the offer, it seemed like a bit of a dud deal for Clive. However, this was the first time that three dragons had made an offer in the show’s six season history.
In the end, Clive, I thought, did the right thing and rejected their offer.
I believe the show raised the following issues:
- The online market for jewellery is real, forever growing, and as the interest from the dragons has shown, is a worthwile investment.
- Overheads, despite over $3 million of sales, can kill a jewellery business. It seems that even though diamondgeezer.com made a 39% gross margin, they only made 3000 pounds last year.
- Don’t prostitute your business to venture capitalists, especially when you want to expand into the low end of the jewellery market.
Meanwhile, poor Clive and diamondgeezer.com have been criticised on SEO forums, blogs and even Rapaport for bad SEO practices.