A single mother from Scunthorpe, whose invention left all five dragons speechless and eager to invest, has spoken out against her investors claiming their ‘investment’ was nothing more than a badly managed, expensive loan.
Speaking to the Mail on Sunday, Sharon Wright revealed the ordeal she underwent as a result of the finance she never received from Dragons, James Caan and Duncan Bannantyne.
The experience was so traumatic she believes it caused her to have a nervous breakdown, resulting in her subsequent hospitalisation earlier this year.
Last year Sharon Wright went on the BBC’s Dragons’ Den to pitch her invention, the MagnaMole in the hope of securing £50,000 in return of a 15 per cent equity share in her company, Talpa Products.
The MagnaMole, Talpa’s star product, is a plastic rod designed to take a cable through cavity walls using magnates, preventing the risk of electrocution. Before her appearance on the programme, Wright had already won the Diamond Award for Innovation and had sold 41,000 MagnaMoles in the UK, but she needed investment in order to take the product global.
Speaking to the Mail on Sunday she said: “To go on that programme people are either emotionally desperate or financially desperate, or both. I was both, because I’d worked really, really hard but I knew that I would never make a profit just selling in this country. This was a platform and I needed to go global.”
But what the unsuspecting inventor didn’t bank on was her investors ‘ruining her accounts’ and destroying her self esteem.
Together, James Caan and Duncan Bannatyne agreed an £80,000 investment in return for 22.4 per cent in the company. With Caan’s fortune thought to be worth £85 million and Bannatyne’s £320 million, Wright naturally thought she was in good hands.
However, in the weeks that followed she claims she had no support from either dragon and that the £80,000 was actually a loan that she would have to pay back. On learning this Sharon considered pulling out, but she didn’t. In June, four months after the filming of the programme, Sharon received two ‘pre-contracts’ from the dragons each pledging £40,000 each.
One month later, still having seen no money, Sharon was told she had to sign the contracts, which she did despite not having legal representation.
She says that Bannatyne asked if she needed a lawyer to which she replied, “well you’re not going to rip me off are you, because you’ve got a lot more money than me.”
And then disaster struck. The episode featuring her and the MagnaMole was aired and she found herself inundated with calls and emails, but still without funding.
Receiving absolutely no support from either dragon she borrowed money and employed a solicitor to examine her contract.
It was only then the novice businesswoman discovered the truth behind the contracts; the dragons had bought their 22.5 per cent share for a fee of £1 per share, they bought nearly a quarter of the company for £29 on the premise they would loan her £80,000. But it didn’t stop there, there would be no extra money, only limited access to the loan, and the loan itself, though interest-free, would be reduced at any point to however much her ‘investors’ chose.
And as if to add insult to injury, the contract also stated the dragons could charge a fee for their services, but that one of the dragons would act as chair of her company and would have final say on all decisions. At the same meeting she claims she was asked to reduce her salary to the minimum wage (£12,000).
Thankfully her lawyer organised a termination of the contract and now Sharon is putting her experiences to good use and is releasing a book about her ordeal.
Commenting on what happened, Cann said: “Unfortunately, within a few months of Sharon appearing she decided that due to the success and positive feedback from the show she would prefer to keep 100 per cent of her company, which Duncan and I fully supported.
“Occasionally the investment opportunity isn’t as it appears on the show. I wish Sharon all the best.”
A spokesperson for Bannatyne said: “Duncan’s pre-contract clearly shows he had no intention of making a loan, just an equity investment. This is backed up by his offer of a full £80,000 equity investment after Ms Wright became unhappy with James Caan’s altered terms.
“James Caan might be able to shed light on his intentions in shifting the goalposts but Duncan has been consistent; I understand Ms Wright appreciated Duncan’s offer of full £80,000 equity but politely declined for her own reasons.”
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