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Classic, novelty cars are the niche market in question, but the Dragons are left unsure that Faizal and Gary have the drive to succeed.

Gary and Faizal have set up a new company which wants to develop toys and merchandise based around the smallest working car in the world.

It seems they have judged their audience well: Peter Jones, Theo Paphitis, James Caan and Duncan Bannatyne all leap up to play in the expensive toys while Deborah Meaden looks on.

With the fun over, it's time for the questions.

On asking about production costs for the vehicles, Peter realises that what the entrepreneurs are pitching to the Dragons is not the cars themselves, but the opportunity for merchandising.

Faizal and Gary want to develop toys, board games and remote controls in order to give the personable little cars a real character.

Peter quizzes them on their specific plans and finds them vague at best. He remarks that they're asking him to make the business plan for them.

Deborah Meaden puts it straight. Gary and Faizal are coming over as "completely half-cocked". She wants to know their specific business plan and the entrepreneurs can't provide one. With nothing concrete to invest in, Deborah declares herself out.

Duncan Bannatyne asks how many models of car Peel is making. It's just the two in the Den. To Duncan that doesn't look like a proper range with room for expansion.

Theo Paphitis, meanwhile, says they need full-time help and a working partner - and that's not what the Dragons are for. Theo and Duncan bow out of the negotiations.

Peter berates them for their vague answers and having no idea what they want or how to achieve it. He gives them a demonstration of what he was hoping to hear, managing in the process to convince Deborah to invest in him. Peter isn't hearing anything so compelling from Faizal and Gary: he won't invest.

James Caan is in a kinder mood. He appreciates that the entrepreneurs have been upfront in admitting what they don't know and asks more about the contract with Ripley's. James's approach coaxes some more specific answers from Gary.

Perhaps James sees an opportunity where the other Dragons do not. He estimates that Gary and Faizal could make £250,000–500,000 from the deal.

Drawing sidelong glances from his fellow Dragons, a contemplative James makes an offer. He will supply the £80,000 but wants 50% of the business, to make up for the fact that he doesn't even know what the business is.

Gary and Faizal have a creative counteroffer. They will give James one of each of their car models and 30% of the business, further offering to give him back his investment if he does not recoup it in two years. James doesn't take long to agree.

From the look on Theo's face, he thinks this deal is risky to say the least... but James's decision is made. The die-cast cars are cast.

The deal done in the Den:

James Caan: £80,000 for 30% of Peel Engineering, with a guarantee that his money will be refunded if he does not make it back within two years.

Last updated: 16th August 2010