Small Business

Lessons from the Dragons: An Acceptable Price for Expertise

A deal turned down and some eye-raising valuations on Dragons' Den Season 10 Episode 3

Written by Murad Hemmadi
Nicole Smith of Flytographer. Photo: CBC

Almost 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 10 (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. Episode 3 included a difficult decisionand two entrepreneurs with sky-high valuations.


Entrepreneur: Nicole Smith | From: Victoria, B.C. | Ask: $175,000 for 5%

Service that connects travellers with local photographers

Envy-inducing photographs are the reward for a vacation well-spent. After the in-situ joys of relaxing and sightseeing in a foreign locale have faded, the pictures you take home to show friends and colleagues are what make travelling memorable.

Nicole Smith tapped into that desire for photographic memories, and the potential of her platform connecting local photographers with vacationers in over 150 cities world wide drew the Dragons’ interest. Smith received an offer of $175,000 of 10% from Michele Romanow and Joe Mimran. She turned it down.

To ensure vacationers don’t return home with a few half-hearted selfies to show for their travels, Flytographer charges start at U.S.$250 for a half-hour session. Some Dragons expressed surprise that anyone would pay those rates, but Romanow wasn’t phased. “When you play with the Internet, you play with much larger numbers,” she explains in an exclusive interview before the episode aired. “Finding people that can pay $250 for a session is a lot easier when you’re doing that, because you can use very specific marketing tools to target [them].”

It was another price tag that ultimately scuppered the deal. Romanow initially made a solo offer of $175,000 for 5.8%, which matched the $3 million valuation Flytographer received in a January seed funding round. But bringing Mimran into the deal brought the equity ask up to a tenth of the company, and Smith couldn’t agree to those terms. “Given that I already have investors that have a different valuation, it just feels too high,” she said on the show. “I have to be honest, it’s a really difficult decision.”

Post-filming, Romanow maintains that she and Mimran would have been well worth the extra equity, becauseFlytographer’s operating model plays to their strengths. “[It’s] a business that relies on the on-demand market space, on technology, and on the branding around this awesome luxury experience of getting photos taken around the world,” says Romanow, whose day jobs are Head of Marketing at Snap by Groupon and Co-Founder of Buytopia. “I think that’s why Joe and I were comfortable asking for a little bit more.” Romanow says she could have used her experience and connections on things like making Flytographer work seamlessly on mobile in each city it operates in, dealing with a crowdsourced labour pool and minimizing marketing costs. And on the show, Mimran offered his marketing expertise. “We’ll put some real energy to getting this where it needs to get to,” he told Smith. Ultimately, it was not to be.

Romanow sympathizes with Smith’s sense of responsibility to her existing backers. “I totally respect her opinion that she had already set a valuation with investors and she needed to meet that,” she says. “[But] every investor brings something different to the table—sometimes you’re just bringing capital, but sometimes you’re bringing way more knowledge and expertise.”

Make My Belly Fit

Entrepreneur: Ben McHugh | From: Montreal | Ask: $70,000 for 30%

A jacket extender for maternity and baby-carrying

The value of local: McHugh’s product sparked a bidding war in the Den. But Michael Wekerle’s constantly-fluctuating offer came with the condition that the company move production overseas to reduce costs. That was a deal breaker for McHugh. “A lot of our customers appreciate that it is Canadian made,” he told Wekerle. Manjit Minhas agreed, giving him $70,000 in exchange for a five-year 7% royalty followed by a 15% equity stake.

WINR Games

Entrepreneur: Jeremy Zuckerman | From: Toronto | Ask: $500,000 for 5%

An app containing games that users can pay free for cash prizes

Risk versus reward: Gaming is a tough business to be successful in. Add that to WINR’s eight-figure valuation, and none of the Dragons wanted to play. “I want to look at the numbers though—how am I getting my money back?” asked Jim Treliving, who did say he was impressed by Zuckerman’s efforts. “The investment is pretty high for a crapshoot, as I call it.” Zuckerman left with no offers.

Nutri-Qual Inc.

Entrepreneur: Pierre Tisserand | From: Sainte-Anne-de-la-Rochelle, QC | Ask: $500,000 for 5%

Probiotic preservative for meat

Impressions matter: Despite an in-the-works contract worth millions with retailer Giant Tiger and an impressive patent portfolio, the Dragons had qualms about Tisserand’s product and valuation. “My biggest concern is the word ‘bacteria,’” said Jim Treliving. “Because you will not buy that product if you found out there was bacteria already put on it.” Tisserand protested that consumers are increasingly comfortable with probiotic products, but in vain—he got no offers.

Able Bionics

Entrepreneur: Mitchell Rogers | From: London, ON | Ask: $250,000 for 15%

Neuro-rehabilitation facility where patients are trained to use bionic skeletons

A worthwhile deal: Rogers’ story of regaining mobility after an road accident-induced spinal cord injury touched the Dragons, and they were impressed by his business undertaking. “I want to try to help, and I want to try to be a part of this,” said Michael Wekerle, “I think it’s got a good future, but the sales aren’t there for an equity investment.” Instead, he offered a convertible debenture for three years at Rogers’ asking price. The others chose to chip in $50,000 each, and Able Bionics walked out with a deal from all five Dragons.


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