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Dragons' Den Ca - Season 20 Episode 13
Transcript
00:00Tonight on Dragon's Den.
00:06Ahoy, dragons!
00:10I'm a biomedical engineer, and alongside a rocket scientist,
00:14we decided to become farmers.
00:16Okay. Makes sense.
00:18So the suits, um, you know, it's like our little fishing mullet, you know?
00:23You're dressing for the job you want, which is part fisherman and part businessperson, right?
00:27Exactly.
00:28You may want to contact your lawyer when this is open.
00:31No, no, no, no, no.
00:32You've got to be careful.
00:33Our lawyers are very good, don't worry about it.
00:58The first to bring their business to the den.
01:00So we packed up an entire fishing hut.
01:03We've got lobster traps.
01:04We've got burlap bags of coffee.
01:06We figured we'd show them what we're all about.
01:08I believe that if you're going to do a thing, you do it with your whole heart.
01:14Ahoy, dragons!
01:16I'm Laura Richard.
01:19And I'm Brad Rideau.
01:21And we're the founders of Saltwinds Coffee from Fredericton, New Brunswick.
01:25And we're here today looking for a million dollars for 10% of our company.
01:28Wow.
01:29That's a lot of coffee.
01:30A million dollars?
01:31That's a lot of beans.
01:33Well, dragons, growing up in the Maritimes, I heard a story years ago about how when coffee first came to Canada, it came on wooden sailing ships.
01:40And back then, the warm, salty ocean air would soak into the beans during the journey.
01:44But I always wondered what that coffee must have tasted like.
01:47That's where I come in.
01:48I'm a scientist with a PhD in chemistry from the University of Oxford.
01:52Wow.
01:53I developed a method to infuse coffee beans with ocean air and recreate that historic taste.
01:58Wow.
01:59Well, that's neat.
02:00We're riding a rising tide of sails and charting a course to new ports of call.
02:05So, dragons, are you ready to jump aboard with us?
02:08100%.
02:09You guys brought this from New Brunswick.
02:10We built it and I drove it up from New Brunswick over the last two days.
02:14How long did it take to get this here?
02:16Two days.
02:17Wow.
02:18That's commitment.
02:19It's a big drive.
02:20It's beautiful.
02:22The best way to taste the difference that ocean air makes in coffee is to try a cup.
02:26Okay.
02:27So, I'm going to make for you here a coconut-flavored iced coffee while Brad pours out some mugs of our hot ocean air dark roast.
02:34We can make really amazing cold coffees because as it cools down, it makes the coffee smoother, sweeter, and less bitter tasting than other coffees.
02:43Well, you're about to save the day. Fastest way to my heart is caffeine.
02:46Awesome.
02:47Yeah.
02:48Can't wait.
02:49My milk for you.
02:51And there's your coconut iced coffee.
02:52Awesome.
02:53It makes it really less bitter on the aftertaste.
02:55Right.
02:56That's actually a traditional dark roast, but it drinks kind of like a medium or a medium
03:00dark because of the ocean air infusion process.
03:03There's zero bitterness in this.
03:06Like, zero.
03:07This is a really smooth coffee.
03:09It's very, very good.
03:10And I sample a lot of coffee, trust me, so that's very good.
03:14I didn't get any sense though of salt or ocean flavor.
03:18Am I supposed to?
03:19No, the effect of our ocean air infusion process isn't to make the coffee salty, but to change the chemistry of the coffee.
03:26It takes the bean.
03:27But what's really unique about our process is it actually improves the quality of the coffee.
03:31So what helps us in this current climate of increasing prices is that we can take coffees that are less expensive,
03:37but then give them extra flavor and quality from the consumer's perspective.
03:41Where are your beans coming from?
03:43From Central South America, so Nicaragua, Guatemala, Colombia.
03:48So you get them from South America, the beans.
03:50And what do you do once you get them?
03:52Now the process itself, we have several patents pending on this as well as trademarks to protect what we're doing.
03:58But effectively, instead of beans being on a ship for months and months, we can do this in a matter of minutes,
04:03in a scalable, repeatable fashion in our own facility.
04:06What does that look like?
04:07You're not simulating waves for the beans.
04:09It's about recreating the conditions that were on the ships.
04:12So Laura, when you were in Oxford, did you think you were going to be doing this?
04:16No.
04:17But you've got to follow the opportunities that life puts in front of you, right?
04:21Just walk me through that.
04:22So I want to make sure I'm clear with this.
04:25So you're buying a lower-grade bean.
04:27Yeah.
04:28You're putting it through your process and then making it more premium as a result of that.
04:33Increased quality.
04:34It also is a great lesson for people who are watching as entrepreneurs that innovation can happen in any category.
04:41And often it is those older categories like coffee and other things that don't get innovated in.
04:48How much do you sell these for, for example?
04:50So this would sell for $22.
04:52Oh, really?
04:53So you're in a super, super premium pattern.
04:55We're in a premium.
04:56Yep.
04:57You are super premium.
04:58You're not just premium.
04:59You're super premium.
05:00It's pricey.
05:01Yeah.
05:02How much money have you invested in this business so far?
05:05We personally have about $370,000 into this.
05:12Woo!
05:13Wow, that's a commitment.
05:15And do you have any debt on the business?
05:17Any houses got mortgaged or anything like that?
05:19We sold our house.
05:20You sold your house?
05:21We downsized to something smaller, sold the second vehicle.
05:24That's a ton of investment that you put into this.
05:26Like you're all in.
05:27Oh, yeah.
05:28Right.
05:29Do you guys have money in the bank right now?
05:30Not.
05:31Like our runway is very, very short, but we're...
05:34How much runway do you have?
05:35Like months.
05:36So I'm really curious about the sales side of it.
05:40$150,000 first year, about $650,000 the second year.
05:46We just broke a million in gross sales this year.
05:50How much did you make on the $650,000 or lose?
05:53We lost about $150,000 on that.
05:58Wow.
05:59At the stage we're at, we can't afford to buy in large quantities of anything, right?
06:03Right.
06:04Economies of scale that start to make this profitable.
06:07So you clearly think your patents are worth a lot of money.
06:11Yeah.
06:12Well, I mean, I can do some quick math for you on that.
06:15So the coffees we use, if you look at the bean pricing this year, they've doubled in price.
06:21Yeah.
06:22So, you know, to a big roastery, the large roasters, they'll roast 300 to 600 million pounds a year.
06:30So even if it was 10% of that value to them, that's a lot of value for them.
06:35But then would that mean you're taking your technology and licensing it to sell it to someone else?
06:40Well...
06:41Or a company.
06:42Or their company, yeah.
06:43Right.
06:44You'd sell the whole processing thing to someone else.
06:46Correct, yeah.
06:47So why are you building a brand?
06:48Like, why not sell it to them or license it to them and make money at it?
06:53Yeah, I mean, I guess it started with the story.
06:57But you're doing, like, the toughest path to market here.
07:00Right.
07:01Yes.
07:02And the toughest path to make money.
07:04Brad and Laura, first of all, a million dollars is a lot of money to invest in any business.
07:09Right.
07:10And I think you're going to need a lot more than a million bucks.
07:13And the fact that you're losing money, I'm going to be out.
07:16I can go.
07:17It's one of the smoothest coffees I've ever tasted in my life.
07:20So kudos for what your technology has done.
07:23He's a big coffee trigger.
07:24Yeah.
07:25I think you've got some rough seas ahead.
07:28You're in a competitive space where there are literally thousands and thousands of million dollar coffee businesses out there in North America.
07:37And so I'm going to be out.
07:40I don't see a strategic plan to profitable growth.
07:45I'm out.
07:49You've actually figured out something very differentiated in a very competitive space with very good economics around it.
07:58The technology you have is a far simpler play than building a consumer brand in arguably one of the most competitive spaces.
08:06I'm not the right partner for that on the manufacturing side, so I'm going to be out.
08:11Well, I would make you an offer.
08:18I'd give you a million dollars for the technology.
08:20You'd own the technology?
08:24You'd own the technology.
08:25I'd own the technology.
08:26It's an interesting offer.
08:27I'd give you a million dollars for the technology.
08:43I'd give you a million dollars for the technology.
08:47But she would own the technology.
08:49Is that what you're saying?
08:50You'd own the technology.
08:51I'd own the technology.
08:52I'd let you keep Saltwinds as a brand so you can continue to run that brand using the technology that you've obviously created.
09:01And you'd have to pay for that technology because it would be done through Co-Packer.
09:05And do they get anything besides a million dollars for that technology?
09:08Do they get the royalty?
09:09No, they get the million dollars and the coffee.
09:10They get to keep Saltwinds.
09:11Can we have a moment to discuss?
09:15Of course.
09:16Yeah.
09:17Here for a second.
09:19So it's a million-pound portfolio.
09:21It's not enough.
09:22No, it's worth more than that.
09:24Yeah.
09:25You offered a very fair and interesting.
09:26Yeah.
09:27Yeah.
09:28Creative offer.
09:29And we want it as part of the other brand too.
09:33Yeah.
09:34I hope they take it.
09:36They've lost enough money.
09:38Okay.
09:39Okay.
09:42So Brad and Laura, what'd you guys decide?
09:45Thank you very much, Arlene, for the offer.
09:48But we do think the technology is worth more than that.
09:52But we do appreciate the offer.
09:56Thanks.
09:57Okay.
09:58Bye.
10:03Well, they believe in the technology.
10:05But they haven't done anything with it.
10:07They can get there.
10:08They've lost a ton of money and they continue to.
10:10That was a big opportunity for them.
10:11The challenge is they're out of money in a couple months.
10:13Agreed.
10:14They're going to have to decide what they're going to focus on,
10:17whether it's the technology or the brand.
10:19There's a lot of value in our company.
10:20It's difficult to show all the value sometimes in a forum like this.
10:26Yeah.
10:27We think it's worth more.
10:28And we're going to go out and build that and show them.
10:30Next, let's see if this Montreal entrepreneur can convince the Dragons he's got more than a corner of the grab-and-go market.
10:51Snacks.
10:52Candies.
10:53Hi, Dragons.
10:54My name is Sam.
10:55I'm from Montreal, Quebec.
10:56And I'm the CEO and founder of Kelmart 24, the first natural convenience store in Canada.
11:06We're asking for $500,000 in exchange of 5% of the company.
11:11Oh.
11:12Back when I was an engineering student, I used to be a big consumer of junk food, sugar energy drinks.
11:20And so I had the idea to bring all these great products that you find in stores like Whole Foods markets in a convenient way, accessible around your corner.
11:30We have all the classic categories of that convenience store, but the products we have, like the chips, are not like-
11:36Everything's natural.
11:37Everything's natural and better for you.
11:38Everything's natural, organic, better for you.
11:40So why don't you come up, like, see some of our products, check out some of our products.
11:44Yeah.
11:45Let's go convenience shopping.
11:46Maybe try some coffee.
11:47Yeah.
11:48Kale Mart 24 stores can be found in the Montreal area, with more locations opening in Ontario this year.
11:55These guys are all Dragon's Den companies.
11:57Awake chocolate.
11:58Yeah.
11:59Pure gum.
12:00Pure gum is a Dragon's Den company.
12:01Yeah.
12:02In addition to prepackaged goods and meals, Kale Mart 24 also sells smoothies, coffee and hot food items.
12:09Sam, do you make all the products, the fresh products in store?
12:12We have an industrial kitchen.
12:14Okay.
12:15That makes all the products themselves.
12:16They ship it to us three times a week.
12:19So it's always fresh, seven days shelf life.
12:21How many square feet is your store?
12:23Around 1,000 square feet is the ideal size.
12:25We have one store that's 400 square feet, which is doing over $1,800 per square feet, which is crazy in the industry.
12:34That's insane.
12:35And what's the other store doing?
12:36That's insane.
12:37The other one's around $1,100.
12:39That's not real, $1,100.
12:40That's very good.
12:41Yes, we're above average.
12:42This is way higher, because your basket sizes are so high because natural products are more expensive and people buy more of them.
12:47Yes, but also the traffic.
12:49We have very high traffic per location.
12:51Right.
12:52So there's a few things wrong with your business right now.
12:54First of all, you're calling it Kale Mart, which is a knockout from Kmart.
12:59You're also calling it Kale Mart 24.
13:02I have a business called Alt 24, which is exactly that.
13:06No, it's not exactly that at all.
13:09Well, it's a convenience store.
13:11Yes, but it's not that at all.
13:14That's an automated business.
13:16Oh, so you know the business.
13:18I know them very well.
13:19And you chose to knock off the name?
13:21All their franchisees are coming to us.
13:23I don't think that's knocking off the name.
13:24We have employees in our store.
13:26Their business is an automated store.
13:28No, no, my business.
13:29Huh?
13:30My business.
13:31That's my business.
13:32That's your business?
13:33Yes.
13:34So look, your business.
13:35Alt 24 is my business, and that's a knockoff.
13:38This is a knockoff of Alt 24.
13:39No, it's not a knockoff.
13:41You come in here asking for money, and the money is going to be to defend a lawsuit.
13:57This is a knockoff of Alt 24.
13:59No, it's not a knockoff.
14:00No, it's not a knockoff.
14:01What you're carrying, Coca-Cola and Pepsi and Lay's products.
14:04Do you see any Coca-Cola here?
14:05Sorry, because I'm not...
14:06No, come to our store.
14:07No, no, no.
14:08Come to our store.
14:09Because I'm not carrying some of your products.
14:10No, sorry.
14:11You're like a coup star without an employee, without any lottery, alcohol, because you're
14:16not allowed to because you don't have an employee.
14:19You have 35% like robbery.
14:22Sam.
14:23Sam.
14:24Look, I know the people there very well.
14:26This is a knockoff of an existing business, even the name.
14:30How is it a knockoff?
14:31It's a knockoff because, first of all, it has 24, and it's convenient.
14:34It's like saying 7-Eleven.
14:35How is it not because it has the word 24?
14:37A lot of people have 24 in their name.
14:39It's not like your business.
14:40Sam, I'm going to give you a little piece of advice, okay?
14:43Like, when you're going so close to something that already exists...
14:47It doesn't exist.
14:48No, I'm sorry.
14:49No, no, no.
14:50You've got to be careful with lawsuits, okay?
14:53Okay, go ahead.
14:54I'm telling you, you've got to be careful.
14:56You've got to be careful.
14:57You come in here asking for money, and the money is going to be to defend a lawsuit.
15:01Okay, it's fine.
15:02I'm making it very simple.
15:03I am out.
15:05But I can tell you, you may want to contact your lawyer when this is over.
15:09Yeah, our lawyers are very good.
15:11Don't worry about it.
15:12That's what you're going to be spending money on.
15:14Let's move past it.
15:16Your offering is basic.
15:18Sam.
15:19Give the guy a break, right?
15:20Sam, just take a chill pill.
15:22You need to just now realize that you've got one dragon out,
15:25and there's four of us that are still trying to talk to you.
15:28So, can you tell us what your sales were, please?
15:31So, per store, on average, it's a million dollar revenue.
15:35Net profit is 15%.
15:38Gross margin, 45%.
15:40And this year, we're going to do 4.7 million with three corporate stores
15:44and one that's opening soon.
15:46Is that 4.7 million with three stores or four stores?
15:49Because a million per store adds up to 3 million a year.
15:52How do you get to the 4.7?
15:54It's from franchise fees that we collected.
15:57Okay.
15:58We have already sold nine franchise stores.
16:01What does it cost you to create that franchise opportunity?
16:04That cost us probably $40,000.
16:07That's it?
16:08That's it?
16:09Yes.
16:10Are you sure?
16:11Yes, yes.
16:12That's too cheap.
16:13That's too cheap.
16:14It sounds impossible to franchise a business for $40,000.
16:17I can show you the books.
16:19I'm kind of doubting some of the, to be honest, the numbers.
16:22Like, they're all just too good to be true.
16:24I've been around enough to know, hmm, do you either not know all the numbers?
16:29I know very well.
16:30It sounds like he knows.
16:31There's something missing here.
16:32What's your filter to decide whether a product makes it in your doors or not?
16:37So, first we look at Nielsen data, if they're performing or not.
16:42If they're performing, we're interested.
16:44But you have standards that are better for you.
16:46You're not going to be selling cigarettes.
16:48We sell classic categories of convenience stores.
16:52You do?
16:53You better sell them.
16:54Do you sell vapes?
16:55Vapes.
16:56Yes, we sell vapes and cigarettes.
16:57Oh, yeah.
16:58That's a big category.
16:59But let me explain to you.
17:00Let me explain to you.
17:01Now I'm confused.
17:02If you don't have three categories, which are tobacco, alcohol, and lottery, you're not
17:11getting your space.
17:12I thought this was like an ethical version of a 7-Eleven, where you'd say, we're only
17:17carrying healthy products.
17:18We're not going to do vapes.
17:20Yes.
17:21No, no.
17:22It's all natural.
17:23Don't tell me that I have friends that go to the gym, that eat only like solids.
17:28They're smoking because they're smokers.
17:29You're doing all the natural stuff and you're doing all the sins because you are in a business
17:35to make money.
17:36Of course.
17:37So, stop pretending that you are something that you are not.
17:39I don't think he protected it at all.
17:43For every other founder, we would say, wow, you looked at the data, you figured out what
17:48you were selling and you built it $1,300 to $18 of sales per square foot.
17:52I understand that.
17:53I don't have a problem with that.
17:54Michelle is right.
17:55With your story, there's no question that you're doing well.
18:00With your approach, there's a concern about you as an entrepreneur.
18:04Like, not that you're not a good entrepreneur, because I think you're damn smart, but you're
18:08also, you're also a little too aggressive with the...
18:12Well, when someone comes and tell me he's going to have a low...
18:15Sam, Sam, come back for a second.
18:16...and your franchises are coming to us to save them.
18:18You know, I saved two of your franchisees.
18:20That's too confrontational.
18:22Sam, listen to me.
18:23You're raising money and the point of raising money is that you have to instill confidence
18:27in people, okay?
18:28So, if you have an investor, a potential investor that came at you hard, your composure is important.
18:34How you compose yourself is important.
18:36How you answer the question.
18:37I am very composed.
18:38Listen, Sam.
18:39I am very composed.
18:40We all walk into rooms.
18:41But you're coming to me telling me.
18:42Hold on, Sam.
18:43Hold on a second.
18:44Hold on.
18:45No.
18:46Sam, you're not listening.
18:47No, I'm not listening.
18:48Okay.
18:49So, that's the reason why this will never get anywhere, right?
18:51Okay, you'll see.
18:52Because you do not listen.
18:53Good luck.
18:54Okay, good.
18:55Good luck.
18:56You're not listening, Sam.
18:57You're not listening.
18:58The number of times people said something terrible about my business, and I just sit there and very
19:03calmly walk them back to center.
19:05Mm-hmm.
19:06You're getting a good advice right now, and you're still not listening.
19:09I am listening.
19:10But you're being defensive.
19:11No, you're still being defensive.
19:12You're still being defensive.
19:13No, I'm listening.
19:14You know, like, I'm not here to deal with that.
19:17So, sorry.
19:18But Sam, but Sam...
19:19Yeah, you are.
19:20Because you're asking us for our money.
19:21You're here to get money.
19:22You are here to deal with that.
19:23You are asking us for our money.
19:24I'll keep it by cool, like...
19:25No, you're not.
19:26I think working with you could be challenging.
19:31And so, I'm sorry, but I'm going to be out.
19:36Okay.
19:37Based on how this went today, I think you just got to do a little bit more work as a founder.
19:41So, I'm out.
19:43I think you missed an opportunity.
19:46But, hey, I'm the first one to say, have a WTF willing to fail mentality, right?
19:52There's a lesson in this.
19:53And I think you're a scrappy entrepreneur who's negotiated some great deals.
19:58You've got a business with some amazing numbers.
20:01What I found challenging was building a business is about leadership because you need followers,
20:08especially as franchise owners, to come in and follow your vision and what you see building in the world.
20:14And I think you've come in and you've sort of kept a little bit of the chip on your shoulder.
20:18And I think that's made you less open to some of the opportunities that we might have ended up seeing.
20:24And for that reason, I'm out.
20:25Okay.
20:30I think maybe the lesson here is that the response is often more important than the pitch.
20:34Yes.
20:35He got thrown off.
20:36I think he reacted completely inappropriately.
20:38He had to recover.
20:39He had to recover.
20:40Business is not personal.
20:41We want to know you're strong enough that you can stick to where your business model is.
20:44Because we're investing in them.
20:45But thoughtful enough that you can say, huh, that's a good point.
20:48Yeah.
20:49Let's think about that.
20:50Yes.
20:51We're deciding if we like the person and believe we could do business with them.
20:54You know, the business is great.
20:56It's doing amazing.
20:57We're going to get to where we want to be.
20:59Yeah.
21:00There's no hard feelings.
21:01It's fine.
21:02And yeah.
21:03Coming up.
21:04This is something new that we've developed from the medical research sector.
21:08We turn unused barns into smart farms like this.
21:25Think you have an idea for the next billion dollar big brand?
21:29Hello, dragons.
21:30Come on in.
21:31Yes.
21:32Hey!
21:33Hey!
21:34Auditions are open.
21:35And we want to see you in the den.
21:37There is a better way.
21:39This is so beautiful.
21:41What have you got to lose?
21:42Wow.
21:43Oh, yeah.
21:44This is our moment to shine.
21:46Yes, yes.
21:47Stop dreaming.
21:48Start bitching.
21:49Don't you want a bite of the next big thing?
21:51Yes, we do.
21:52Let's make a dance.
21:53Good luck.
21:54Cheers.
21:55Apply now.
22:02Now, from biochemical engineering to farming, this entrepreneur hopes a little cash can help
22:08grow his farming innovation.
22:11Hello, dragons.
22:12My name is Ishan.
22:13I'm from Surrey, BC.
22:14I'm looking for $500,000 in exchange for 8% of our company, Sky Acres.
22:19I'm a biomedical engineer, and alongside a rocket scientist, we decided to become farmers.
22:25Okay.
22:26Makes sense.
22:27My friends and my extended family are blueberry farmers in Abbotsford, and they were hit with
22:32the floods a few years ago.
22:34And the only place that wasn't affected were the barns.
22:37There's two and a half billion square feet of unused barn space that this could be used
22:42to generate revenue and diversify their income.
22:46So that's what Sky Acres does, is we turn unused barns into smart farms like this.
22:52I have never thought of all the unused square footage in barns.
22:57Oh, that's smart.
22:58Pretty cool.
22:59You can start with three racks just like this, or you can scale up to a thousand.
23:03And this is not hydroponics.
23:05This is something new that we've developed from the medical research sector.
23:08Other vertical farms, they take market share away from the farmers.
23:11Instead, we empower them.
23:13And I'm really proud to announce that most of our customers, they're from the younger
23:17generation, and they're creating a new life for their families' farms.
23:21And you can taste the difference.
23:23So beside you, you'll find some cherry tomatoes, some basil, and the pesto that's on your plate.
23:30So feel free to give it a try.
23:32Sky Acres sells these vertical growing systems to help people grow their own produce.
23:37With a companion app, they also help customers sell their harvest directly to local grocers or restaurants.
23:44We help these farmers grow everything from strawberries to cherry tomatoes and 60 other varieties.
23:50This literally tastes like it was picked five minutes ago.
23:53These tomatoes were picked not long ago.
23:56So we'd be able to harvest, put it in the packaging, and have it on a grocery store shelf so that we really preserve the nutrients, the freshness, and the taste.
24:04Delicious basil.
24:05The issue is growing it isn't really the main issue.
24:08Selling it is a whole other ballgame.
24:10So what we've done is we provide support for that.
24:14So we provide the labeling, we provide the branding, and the packaging.
24:19And not only that, we also provide direct access to grocery stores and restaurants.
24:24These traveled across the country to get here, and they still taste as good.
24:27The crazy thing that we found was cherry tomatoes from our farmers was about 260% higher in nutritional content, which was a huge eye-opener for us.
24:36Why?
24:37A lot of these Californian farms or farms around the world, they are picking it before it's ripe, and they're adding what's called ethylene gas in their trucks, too, so that it ripens on the way there.
24:48Right.
24:49Doesn't sound healthy.
24:50The pesto was delicious.
24:51Oh, thank you.
24:52You said this is not hydroponics, this is a technology from the medical sector.
24:57What does that mean exactly?
24:58I wanted to kind of bring a medical device to market, and what that medical device did is it turned medicine into a mist that lung cancer patients could inhale.
25:08Interesting.
25:09So when the floods happened, something kind of clicked for me that maybe I could repurpose the technology from the medtech sector into agriculture.
25:15So instead of medicine, we're turning nutrients and water into a mist.
25:19What's the substrate?
25:20The really cool part about this is we don't have any substrate at all.
25:24The piece of foam at the top that holds the plant in place, the rest is suspended in that misted environment.
25:30And what this allows the roots to do is they create this really fluffy structure.
25:36And what this means mathematically is it has six times more surface area, and this allows us to grow upwards of six times faster than in the soil.
25:44So the roots are going into a water base that you're mixing with nutrients so that the plants can get what they need to be able to grow.
25:52That's exactly right.
25:53I just put a raised garden at my country house because I want a garden.
25:58But we have a barn.
26:00How much do I have to spend on you to just get that barn going?
26:05One of these systems is only $600.
26:07Is it one of the racks?
26:08It's just one.
26:09So all three levels.
26:10Got it.
26:11With all the lighting, the irrigation, the sensors, they're all just $600.
26:14And you say just $600, giving the impression that that's a lot cheaper than your competitors?
26:20So commercial vertical farming systems start at $200,000, $300,000 for a container farm.
26:24Depends on the size of the farm, right?
26:26If you put this into a large farm and you had $600 per rack, you're going to add up to tens of thousands of dollars fairly quickly.
26:34So, I mean, the challenge of the space is, and I know a lot about it, is the margins.
26:39It's almost impossible to make money at it.
26:41So we make money three ways.
26:43So number one is selling the equipment.
26:45And we make about 35% to 40% profit margin on that.
26:48And number two is we collect royalty fees.
26:50So we collect 15% on the transactions that happen through our two-sided marketplace, connecting these mostly independent stores and restaurants to our network of growers.
26:59And lastly, we also sell the packaging itself.
27:02We make anywhere between $10 and $50 per square foot per month in just those royalties and consumables.
27:10And how the farmers make money, they harvest, put it in the package, and the app that we've developed, they tell them where to deliver it.
27:17The amazing part about this is for something like basil and cherry tomatoes, the profit margin for them after our fees is actually 47%.
27:25Why is it so much for them?
27:27Because you're connecting direct with that buyer.
27:29Exactly.
27:30So we're cutting out the five or six middlemen.
27:32But how many deliveries have been made to an independent store or restaurant?
27:35So every week, there's at least one delivery per farmer.
27:40Okay, so we're still very, very much in the trial phase of this.
27:43Very small.
27:44How much have you done in revenue?
27:45Let's talk the numbers.
27:46Yeah, so we've been in research for the past few years.
27:48So it's been about, I'd say, five months.
27:50And in those five months, we received about $450,000.
27:53So why is this worth $6.25 million today?
27:56We have $3 million already in the pipeline for just equipment purchases.
28:01We see a big potential to scale very quickly.
28:04The more installations we get, the more our recurring revenue compounds.
28:07That's only true if they continue to use the product, right?
28:11And so what happens with a lot of these growing operations is that people lose interest in it.
28:17Arlene has a really good point.
28:18All of us that have had these little vertical farms, you kind of give up because they're a lot of work.
28:23How much money would I make as a farmer for running this vertical farm?
28:29So just these three shelves will generate $730 in monthly revenue after paying a living wage and after paying our 15% as well.
28:40That's if everything grows and everything sells.
28:43That's right.
28:44And what if the farmer doesn't deliver?
28:47For me, when I hear door-to-door logistics, like that is a full-time business.
28:55For sure.
28:56I don't even think we picked up on that.
28:57Just building the Uber part of this business is really, really challenging.
29:03I admire that you took technology that was for the medical, you know, industry and said I can repurpose it and think about it from an ag perspective.
29:11This space has not yet proven a model that truly is scalable and financially viable.
29:18And until that happens, I am going to be out.
29:23I can go.
29:24I'm digging what I'm eating here, but I think you're too early for an investment on my end and I'll be out.
29:30For me, I'm already invested in the vertical farming space, so I'm going to be out just for that reason.
29:36No worries. Thank you.
29:37I like the green mission and that you're giving farmers a new lease on life and on their property.
29:44But at this point where you're at today, this business is not growing on me.
29:50I'm out.
29:51I'm going to buy one of these.
29:53I think it's, I think it's really cool.
29:57And I would love to see how it works at scale.
30:00So again, like you're getting close.
30:03You're just not quite there.
30:05So I'm going to be out for now, but I think you got the seeds of something good.
30:09Amazing.
30:10Thank you so much.
30:11It was a pleasure.
30:12Take care.
30:13All the best.
30:14Bye bye.
30:15Smart kid.
30:21Coming up, another box of Lujan.
30:24In 20 seasons of the show, this is the biggest deal I have ever done.
30:2920 million dollars.
30:47Hi, I'm Alexa Suter.
30:48I'm the founder and CEO of Hoo-Ha, a women's healthy underwear brand.
30:51And this year we're on track to do over 42 million in sales.
30:55I faced the dragons in 2023.
30:57Hoo-Ha has redefined a category of natural underwear.
31:01What you're seeing there is the green panel lining that has zinc oxide permanently embedded
31:06into the fibers during the spinning stage.
31:09It's really skin soothing.
31:10That's impressive.
31:11Last year, our sales were 3.9 million and this year we're projecting 9 million.
31:16That's amazing.
31:17Good for you.
31:18I don't have a fancy business degree.
31:21So I'm really looking and hoping to find mentorship as well.
31:24Okay.
31:27Arlene, I think I'm going to accept your offer.
31:29Oh wow.
31:30That's amazing.
31:31Hoo-Ha.
31:32Welcome to our warehouse.
31:37When I was in the den I got two great pieces of advice.
31:41One was we should stick to what we know best and not get too distracted.
31:45And the other one was innovation is the lifeblood of a company.
31:49So I kind of listened to both.
31:51As we continue pushing the needle on fabric innovation, we're allowing ourselves to get
31:56into new product categories that bring the benefits of our underwear to different areas
32:01of people's wardrobe.
32:02In 2023, we had done 3.9 million.
32:05In 2024, we did over 20 million.
32:08Another box of Hoo-Ha.
32:09And this year we're on track to do over 42 million in sales.
32:13Now we're at a place in the business where we need to invest more in inventory, more in
32:22innovation to really bring this thing from 40 million to 100 million and then multiple
32:27hundreds of millions in sales.
32:34Hi.
32:35Big day.
32:36How are you?
32:37Good to see you.
32:38Nice to meet you too.
32:39This is the first print.
32:40It's going to do really well.
32:41Yeah.
32:42You suggested it.
32:43Yeah.
32:44In 20 seasons of the show, this is the biggest deal I have ever done.
32:51I've been wanting to do an underwear deal for like 17 years.
32:56$20 million is a lot of capital, but you know what?
32:59Alexa and her team are going to make sure that they grow this business.
33:02They're going to scale.
33:03They're going to be entering into new markets and new product lines.
33:06They're going to be able to do that because they were able to find the right capital partner
33:09and they have the right plan.
33:10Me too.
33:11I'm so excited.
33:12And thank you sincerely for the vote of confidence in myself and the team and the brand.
33:19We feel so much stronger to have you in our corner.
33:24Let's make it official.
33:26Are you ready?
33:27Yep.
33:28I'm ready.
33:29Here we go.
33:30It's just really fitting that this is happening on our 20th anniversary of the show.
33:35You know, the thousands of entrepreneurs that have gone through this show.
33:38I think this is a testament to all of them.
33:41High five.
33:42Woo.
33:43I think it shows you what's possible when you dream your dream and you live it out loud
33:47and you push hard to make things possible.
33:49Let me just take that.
33:50All right.
33:51Let me just take that.
33:52Wait.
34:00And finally.
34:01Wow.
34:02They were in suits with fisherman stuffing.
34:04Friends from university wading into the den ready to hook a dragon partner.
34:09Hi dragons.
34:10My name is Glenn and I'm from Lunenburg County, Nova Scotia.
34:13I'm Javi.
34:14I'm from North Vancouver, British Columbia.
34:15And I'm James.
34:16I'm from Keswick, Ontario.
34:18And we're here seeking $150,000 in exchange for 20% of our business, Larry's Catch, based
34:25in Ontario.
34:26So let's face it.
34:27Seafood across Canada can be a little fishy.
34:31Now, I'm not talking about Canadian seafood.
34:35I'm talking about the seafood that we eat, which is over 80% imported.
34:39When I moved to Ontario, I went from eating seafood almost every day to never touching
34:45it.
34:46Oh.
34:47I would beg my father to start sending seafood from back home and it didn't take long for
34:52others to start asking if I could send them seafood as well.
34:55This slowly turned into a side hustle.
34:58And around eight months ago, I coerced two of my best buddies to quit our jobs in tech
35:04and become fishmongers.
35:06I love it.
35:07This sounds a lot like our story.
35:09Yeah.
35:10So Larry's Catch sells seafood boxes online.
35:12Our products are sourced from family owned fishing operations across Canada, including
35:17Nunavut, DC, PEI, and Nova Scotia, wild caught and sustainably certified.
35:23So dragons, are you ready to hook a company that's making waves?
35:26Oh boy.
35:27Well.
35:28On the table next to you, you actually find a Southwestern for your next fishing adventure.
35:32What's with the suits?
35:33Yeah.
35:34You dress in for the job you want, which is part fisherman and part business person,
35:38right?
35:39Exactly.
35:40There's real fish in here.
35:42The seafood boxes contain fresh wild caught fish that are flash frozen for quality assurance.
35:48Available online only, the boxes range in price from $119 to $270.
35:54Half an island.
35:55Nova Scotia.
35:56That's pretty cool.
35:57Nova Scotia scallops.
35:58Atlantic cattle.
35:59What a great idea.
36:00My biggest question, where's Larry?
36:02So Larry is a fifth generation fishing captain based out of a town called Riverport just
36:08outside of Lunenburg.
36:09And as you can see, he's also my father.
36:12Aww.
36:13Aww.
36:14Larry in the early 2000s was diagnosed with primary progressive multiple sclerosis.
36:19Aww.
36:20Um, so he's now, unfortunately, um, uh, he's bound to a wheelchair.
36:27Um, and sorry.
36:29That's okay.
36:30Um, yeah, so this is my sort of special way of carrying on the tradition.
36:35Nice.
36:36Well done, Glenn.
36:37Well done.
36:38It's pretty cool that you tell the story of where the fish came from.
36:41It says, you know, the brave fishers travel up to a hundred kilometers on the ice in the
36:45winter.
36:46Yeah.
36:47So we offer, uh, 17 different products from seven different family run fisheries from six
36:53different communities around Canada.
36:55If I ordered today, when could I get it?
36:57Uh, you get it tomorrow.
36:58Okay.
36:59It's just the three of us waking up five in the morning.
37:01You can imagine us packing orders.
37:03This is exactly how my story's starting.
37:04Yeah.
37:05There you go.
37:06Yeah.
37:07So we went to Queens as well, Michelle.
37:08We actually met on day one of university and we've lived together for the last eight
37:12years.
37:13Did you say you still live together?
37:14Yes.
37:15We live together to this day.
37:17I love it.
37:18What were your revenues last year?
37:20Yeah.
37:21So we only started eight months ago and we've done $230,000 in sales.
37:25Wow.
37:26Good for you.
37:27Can you just run through your unit economics quick?
37:28Yeah.
37:29Our average sales price is $160.
37:32Yeah.
37:33Um, around, uh, 47% of that is directly the product cost.
37:38On average over the last eight months, uh, our margin, uh, has been 24%.
37:43What we've really seen is as soon as we went Ontario wide rather than just the Toronto area,
37:50rural areas lit up.
37:52We actually started sort of targeting, um, East coasters and believe it or not, we actually
37:58would, we would go online, look up when East coast flights were arriving and stand at the
38:03airport and hand out business cards.
38:05Stop.
38:06That is such good guerrilla marketing.
38:09Yeah.
38:10I see, uh, guys your age come in here, pumped up like this, selling alcohol.
38:15You guys are pumped up selling fish.
38:18But you're selling Canadian fish.
38:20And to me, it's got all the makings of the best kind of brand, which is there's a story
38:25to tell.
38:26Thank you so much, Charlie.
38:28So Glenn, uh, what is the big picture vision?
38:30How big will the revenue be in five years?
38:32We want to expand far beyond Ontario and become, uh, the household name.
38:37I want this to be a sustainable industry, um, that is supported within our walls so that
38:42we don't have to depend on other countries to be picking up our stuff.
38:47Is this business actually ready to grow?
38:50Do you actually have enough supply?
38:52That's something that takes time.
38:53Uh, you can't just turn around and all of a sudden have a new supplier.
38:56This year we're set to do about 800k to a million dollars.
39:00Uh, and with our growth rates and with the expertise of a dragon, we know that we can
39:05do to 20 million and beyond.
39:07Mm.
39:08Mm.
39:09I'll make you guys an offer.
39:10Mm.
39:11Uh, I love that you've come in here and rented matching suits to cut costs.
39:16I like you guys.
39:17I'm going to give you, uh, what you've asked for.
39:20150 for 20%.
39:21Thank you, Brian.
39:22Thank you, Brian.
39:23You know, the fact is you came in here looking for 150,000 for 20% and you got that offer,
39:30uh, you know, from Brian, he would be a great partner for you guys.
39:33So I'm going to be up.
39:34I love you guys' attitudes and your optimism.
39:37You're helpful.
39:38You're like so Canadian humble, but for a couple of reasons, this catch isn't for me.
39:43I'm out.
39:45You guys are the sustainable food story and food sovereignty is every
39:49thing.
39:50Mm-hmm.
39:51So I feel very strongly about that.
39:53I would give you the $150,000 for 20% for exactly the same deal that Brian gave you.
40:01So that's my offer.
40:03That's awesome.
40:04Okay.
40:05Michelle.
40:06Um, there are such remarkable similarities in our story and they, like, kind of, like,
40:13all make me, like, emotional because it takes me, like, back.
40:16Um, about, like, being at Queens, meeting my co-founders there, packing boxes, going into
40:21the fishing industry.
40:23You know, it's like, True Local has probably been one of my biggest success stories from
40:26Dragon's Den.
40:27I know just such a disproportionate amount about this space specifically.
40:32Mm-hmm.
40:33I would give you $150,000 for 22.5%.
40:36And that extra 2.5%, I think, would be worth it.
40:40Mm-hmm.
40:41Mm-hmm.
40:42And, you know, I, I do definitely, uh, see, see the value of your track record.
40:46Um, Brian, if you don't mind, would you, uh, please just, uh, share your thoughts in terms
40:51of what, uh, how, how you can help us?
40:54Yeah.
40:55I know how to build a brand with people.
40:57I've got a passion for seeing people grow and build something special and brands that
41:03have meaning and stories behind them.
41:05Mm-hmm.
41:06I'm going to be a part of that.
41:07So I'm going to put this awesome hat back on.
41:09There we go.
41:10Awesome.
41:11Well, thank you very much for sharing that.
41:13Um, do you mind if we just take a moment?
41:15No, go ahead.
41:16Of course, please.
41:17Okay.
41:18They totally remind me of, I think all of us, right?
41:19Like we've been in their shoes and-
41:21Oh, sure have.
41:22Sounds good.
41:23Yeah, sure.
41:24Okay.
41:27Fellas, you are three amazing partners.
41:30So which fourth partner do you want to join your group?
41:33Um, I think we're going to ask if, uh, Michelle and Arlene, uh, would the two of you be willing
41:39to team up on this, uh, for the amount of equity that Michelle asked for?
41:44So 22 and a half percent.
41:46I would be prepared to go in with Michelle.
41:48Okay.
41:49Um, if she wants a partner, but if she doesn't, I'm also prepared to do it on my own.
41:53Okay.
41:54Yeah, I have an enormous amount of respect for Arlene, but I really want to work with the
41:59three of you guys, um, directly in doing this.
42:02So I'd like to do it on my own.
42:03Uh, do you mind if we take a moment again or is that-
42:06Yeah.
42:07No, not at all.
42:08Okay, sorry.
42:09And to be clear, sorry guys, I will do it for the same-
42:11I'll do it for the same 20% that Arlene did.
42:13Oh, wait a minute.
42:14Uh-oh.
42:15Okay.
42:16Okay.
42:17That changed.
42:18Okay, let's talk.
42:19Let's talk.
42:20Folks, do you have guns, Michelle?
42:22She just wants to get-
42:23That's fine.
42:24You're gonna-
42:25That's fine.
42:26Yeah, for sure.
42:27Sounds good.
42:28Good.
42:29Thank you very much, Arlene.
42:30We appreciate it.
42:31Yep.
42:32Um, Michelle, we would be honored to take the deal.
42:35Ooh, 14A.
42:36Thank you guys.
42:37Great work.
42:38Oh my God, you're so tall.
42:40I grew up on seafood.
42:42Thank you all so much.
42:43Yeah, good luck.
42:44I really, really appreciate it.
42:45Bye.
42:47Well, we didn't get that one, Arlene, but there's other fish in the sea.
42:50Yes.
42:51I am so excited to go home, uh, tell my dad he's gonna be absolutely over the moon.
42:58I'm honestly kind of getting emotional just thinking about telling him.
43:02No fear.
43:03No fear.
43:04Tune in next time.
43:05Yeah!
43:06Yeah!
43:07Come on!
43:08We feel like if we were coming back here in three months, we don't pay for futures.
43:12You've watched the show before in 20 years.
43:14I hope, right?
43:15You are in the top 1% of the 1% of entrepreneurs who take $400 and kind of do a million dollars
43:22in revenue in their second year.
43:24It's, it's really phenomenal.
43:25I would never have thought an OT like me could be here in front of you.
43:35And we can help millions.
43:37Put your money in your mouth and your hands are up on the wheel.
43:57Let's go.
43:58Go!
43:59Go!
44:00Go!
44:01Go!
44:02Go!
44:03Go!
44:04Go!
44:05Go!
44:06Go!
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