Noah Bernett, Dino Vassiliou and Benjamin Outmezguine pitch CoolWhey to the Dragons on CBC's Dragons' Den

(from left) Noah Bernett, Dino Vassiliou and Benjamin Outmezguine of CoolWhey. Photo: CBC

More than a decade in, Dragons’ Den continues to inspire and amuse Canadian TV audiences. But the CBC’s hit show isn’t just meant to be entertaining. It’s a televised school for entrepreneurs. For each episode of Season 11 (which airs Wednesdays at 8 pm ET), we’ll be talking to one of the Dragons to get a behind-the-scenes glimpse of their decision-making process and hear what they hope viewers learned. And we’ll be examining the pitches for smart strategies and useful tips that entrepreneurs can use to make their own businesses better. Episode 10, the show’s Second Chance Special, featured a sweet story of redemption for a trio of friends, and an elaborate pitch that entertained.

CoolWhey

Entrepreneurs: Benjamin Outmezguine, Noah Bernett & Dino Vassiliou | From: Montreal
Ask: $150,000 for 10%

Manufactures and distributes protein-infused ice cream

Businesses beware: Consumers are not a forgiving bunch. “You get one, maybe two chances to get somebody, and to get them coming back,” says Manjit Minhas, a master at the art of selling beer and spirits to shoppers.

Not every product is perfect at launch, though. “Everybody has to iterate and keep up with the trends and listen to their customers,” she points out. Take the ice-cream Noah Bernett, Dino Vassiliou and Benjamin Outmezguine served in Season 10 of Dragons’ Den. “I remember spitting it out,” says Minhas. “It had these great characteristics—protein-packed, low calorie and all this kind of stuff—but the taste of it was horrendous.” So the trio reformulated CoolWhey before returning to the Den in the show’s Second Chance Special. “They actually listened to our advice, and they came back with a better-tasting product,” says Minhas in an exclusive interview before the episode aired.

CoolWhey’s second pitch proved more successful. Michael Wekerle offered them the $150,000 for a 5% royalty lasting five years and five days, while Joe Mimran wanted the same percentage in perpetuity. Minhas preferred equity, asking for a 15% stake in return for her capital and ultimately accepting Bernett’s 12.5% counter. (Minhas says the deal is still due diligence).

The company had originally targeted the fitness crowd, planning to sell its ice-cream via gyms and supplement shops. In the time between Den appearances, CoolWhey had expanded across the country and racked up just over $500,000 in sales. But the trio had also broadened their target audience. “People were eating our ice-cream more as a healthy snack as opposed to post-workout,” Vassiliou explained during the pitch. “So that allowed us to lower the protein level, add a bit of sugar, and make it taste ten times better.” CoolWhey was in talks to test the reformulated product in chains like Whole Foods, Longo’os and Rabba Fine Foods. But not all the Dragons liked the turn to the mass market. “I was your biggest fan last year, but I actually liked that you had a product that was very specific,” said Michele Romanow. “I think the ‘better for you’ category is way more crowded.”

CoolWhey’s new strategy presented opportunities and challenges, Minhas acknowledged post-taping. The general ice-cream market has a lot of entrenched players, “competition that has a lot more money and shelf space and reputation.” But the mass market also provides more space for success. “It’s always better to go to a wider range of customers and a bigger pool,” says Minhas. “Nobody ever knows until you start selling to a bunch of different demographics which one’s going to hit.” To have any chance of success, though, the product needs to be right—particularly in the market CoolWhey is targeting. “There’s only a small number of people who will eat something that doesn’t taste good [just because] it’s good for you,” Minhas notes.

One of the biggest strikes against the CoolWhey trio when they first pitched the Dragons was their attitude. “Arrogance,” Mimran exclaimed as they negotiated their way out of a deal with Jim Treliving. But Minhas was impressed by their more humble approach this time around, which was most evident in their willingness to accept the Dragons’ tasting notes. “They put their egos to the side and came back with a better product.”

Accepting advice and suggestions is crucial to making the most of a do-over opportunity says Minhas. “Focus groups and customer feedback are [key],” she counsels. “You’re too close to it—you don’t see the things that are sometimes very obvious.”

Underworld LARP

Entrepreneur: David Ashby | From: Toronto | Ask: $50,000 for 10%

Operates and licenses live-action role playing games

Fervent fans do not a business make: The fantasy world David Ashby has created engenders considerable royalty among those who choose to participate in it. “People fall in love with their characters—it becomes their second skin,” Ashby told the Dragons. Since a Season 9 appearance, his company has bought 100 acres in Fenelon Falls, Ont. on which to build a permanent base, and licensed the concept to 12 other operators in Canada, the U.S. and Japan. But though the pitch—Ashby brought a troupe of Underworld characters to the Den, swords, face paint and all—entertained them, the Dragons were not as impressed by the business model. Players are charged $15 to make a character, and can pay for additional features like being resurrected if they “die” during the game. That added up to $80,000 for the 12 months before filming. “ I don’t think there’s enough revenue coming in,” Joe Mimran said. None of the Dragons made an offer.

Iconic Brewing Co.

Entrepreneurs: Cam McDonald, Bobby Besant & Daniel Bartek | From: Oakville
Ask: $500,000 for 20%

Manufactures and distributes alcoholic beverages

Build a brand that can expand: Strong sales are a great recipe for success on Dragons’ Den, and Cam McDonald, Bobby Besant and Daniel Bartek had good numbers to share for their Season 11 pitch. Iconic Brewing was projecting $4.2 million in revenue from its alcoholic root beer and apple ale products. But the Den’s resident alcohol expert Manjit Minhas wasn’t sold. “Root beer is a very big trend right now,” she noted. “I’m in all of those categories right now too, so you absolutely hit it on the nose with [selling that] flavour. But I’m not loving the taste.” Jim Treliving and Joe Mimran delivered more favourable tasting notes. “You’ve done a very, very good job,” said the latter, highlighting the branding as a particular strong point. He matched the pitchers’ ask. Michael Wekerle offered the capital for a 10¢ per-bottle royalty until he’d doubled his money. Michele Romanow decided to go in with Mimran, presenting a combined bid of $500,000 for 22%. “We could grow a lot of other brands through Iconic Brewing,” Mimran promised. But the trio were keen to hold onto their equity, and they chose to do a deal with Wekerle.

WINR Games

Entrepreneur: Jeremy Zuckerman | From: Toronto | Ask: $250,000 for 5%

Develops mobile games

Concentrate on building a base: Mobile gaming is a tough business, something Jeremy Zuckerman had brought home to him in the year between his appearances in the Den. “It’s very risky but there’s high rewards, and if you can get there it pays off,” he said. After the Dragons declined to do a deal with him in Season 10, Zuckerman had evolved WINR Games into a network of connected apps. Collectively, they’d accumulated over 600,000 downloads. But some of the Dragons weren’t impressed by Zuckerman’s math. WINR was doing $15,000 in monthly recurring revenue, and though the company was breaking even, that had been achieved by downsizing from six to three people. Then there was the $5 million valuation. “Let’s take even 10 times revenue—you’re only at $1.5 million,” observed Joe Mimran. Still, the large user base and Zuckerman’s drive attracted offers. Michael Wekerle proffered a $250,000 credit facility, at 12% per year and a 1% option at the pitcher’s valuation. App expert Michele Romanow offered the cash for an 8% stake. After trying to negotiate her down, Zuckerman took the deal.

Three Farmers Products

Entrepreneurs: Natasha & Elysia Vandenhurk | From: Saskatoon | Ask: $400,000 for 15%

Manufactures and distributes a line of oils and snacks

Too many cooks: The Vandenhurk sisters have demonstrated a knack for turning the agricultural strengths of their home province into consumer products. Three Farmers had done $1.3 million in sales in the year before the duo entered the Den, with just over half of that coming from a recently-launched line of chickpea snacks. The Dragons believed the company was on-trend. “It’s like the biggest thing in the U.S., everyone’s loving it,” said Michele Romanow. But the company’s structure proved less popular—the namesake three farmers owned a majority, with the Vandenhurks’ working their way up to an equal share, leaving a 16% stake for an outside investor. “It’s not really going to get me a say at the table, and you have a lot of other partners and shareholders [who] have way more influence, i.e. the farmers—as they should,” noted Michael Wekerle. Still, the strong sales convinced Wekerle to join forces with Joe Mimran and Manjit Minhas on an offer. They proposed the $400,000 for a 7% royalty in perpetuity. Jim Treliving countered with a 16% ask, but the Vandenhurks preferred the three-Dragon deal.

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