A young entrepreneur who turned down £75,000 from one of television’s dragons has just raised £2.5 million to expand his two-year-old business.

Cally Russell’s ‘personalised shopper’ app has been backed by Royal Mail and a list of other blue chip investors.

He now believes his Mallzee company – which searches the web for hundreds of items suitable to the buyer – will change the way people shop.

In February Russell famously rejected an offer from Peter Jones who was the only one of the five panelists on BBC2’s Dragons’ Den programme prepared to back him, even though he admitted having “no idea whether it is going to be successful or not.”

The other dragons were not convinced of its potential. Deborah Meaden asked: “Why is it better? I don’t share your vision.” Kelly Hoppen felt that the target audience of young people still enjoyed browsing in the shops and was not sure they would choose this way to shop.

But Jones, the media and telecoms millionaire, told the 27-year-old from Edinburgh: “I would be really upset if it was sold for £100 million in year or two’s time. I would really regret it. You could be the next Twitter or Snapchat. Who knows? You have made me a potential gambler.”

He offered Russell all the money he was seeking, but wanted 20% of the business rather than the 5% he was prepared to give away. When Russell hesitated, Jones offered to reduce the stake to 15% if the business made enough money to pay back his investment.

After taking a break to think over the offer, Russell told Jones: “It massively pains me to say I don’t think I can do it.” He later admitted he could have made “a really bad decision”.

The new funding, unveiled today, will be used to innovate the m-commerce space and expand overseas. It brings total investment in the company to £3.1m.

Founded just two years ago in Edinburgh, Russell’s appearance on primetime TV led, not only to hundreds of thousands of new users and retailers signing up but also to numerous investment approaches.

Royal Mail is the lead investor in this round alongside new and existing investors, including the Scottish Investment Bank, Par Equity and top technology entrepreneurs including Gareth Williams (Skyscanner), Rob Dobson (Actix), Chris Van Der Kuyl and Paddy Burns (4j Studios, the makers of Minecraft console).

Russell, son of former Scottish government minister Mike, said: “This round of investment is going to allow us to become the leading fashion shopping app in the world and the mix of investors is going to be vital to allowing us to achieve this.

“With Royal Mail Group we have a partner that plays a vital part in the online shopping environment and one which is well positioned to enable us to access new retailers. Our existing angel investors and new backers such as Chris and Paddy have all scaled highly successful global businesses and their support and insight is going to be vital.

“Fashion shopping on mobile is becoming a very hot space – Mallzee has always been at the forefront – having been the original personalised shopping app. This round of investment will allow us to grow this further but it will also enable us to offer our new insights tool to retailers to enable them to gain actionable insights into what products to market and stock.”

Mallzee is an app that is changing the way people shop, with a user base now into six figures worldwide, thousands of users daily in more than 125 countries and millions of product interactions every week.

Retailers are benefitting by their understanding of how products are being perceived and engaged with and allowing them to order and manage stock more efficiently.

In February Mallzee signed an exclusive year long promotional link-up with Samsung Galaxy Apps.