Residents of Cape Town were treated to sights of a robot dog walking through the CBD as Dwyka Mining Services showcased Boston Dynamic’s Spot….
When it was announced that the international phenomenon that is Dragons’ Den was coming to South Africa, I for one was sceptical about how much value it could really add to the country’s entrepreneurial landscape. It is, after all, an entertainment show and its success depends on its ability to keep people watching. That said, it was always clear that there was intrinsic value for the entrepreneurs who did actually manage to get funding, if only because of the cash injection it would provide. Meeting SA Florist founders Nicholas Wallander and Fraser Black, however, it’s obvious that the power of the dragons goes way beyond the reach of their pockets.
There are a couple of reasons that SA Florist makes such a compelling case study of the show’s impact. First off, at R3.6-million, it’s one of the largest investments on the show to date. Secondly, all five dragons were involved in it and third, taking the deal has resulted in immediate and very visible changes for the company.
Prior to the show, the ecommerce site had quietly chugged along for a couple of years as a neat little money turner for its partners. It had one full-time employee and did about R1-million in turnover through its retail sales by offering a streamlined point of connection for local florists, among other things.
Wallander had only started it because he’d seen his mother, an independent florist herself, have to shutdown her own retail operations because of escalating costs. Netflorist, the biggest online player in the space, meanwhile doesn’t really cater to independent florists. SA Florist was therefore a boutique — in all senses of the word — with the chief aim being to provide products “made with love and care by career florists”.
Even with the ink still drying on the deal, the company now has a full-time staff complement of five, including Wallander, who quit a very comfortable position at Visa to run the company full-time (something which he was actually forced to do in order for the deal to go through). The site’s been completely redesigned and deals are in the works that will not only change the company but the lives of ordinary South Africans. All that because of a little time in front of some very wealthy people on a TV show.
But what did it take to get there?
To people sitting at home, Dragons’ Den seems like a fairly simple process: you go in and pitch, and if the dragons like you an offer comes forward, with maybe a little wiggle room for negotiation and consultation. Intuitively we’re all aware that there’s a fair amount of editing and at least some paperwork that go into the deals. Even if you manage to keep that in mind however, Ventureburn’s discussions with Wallander and Black suggest that it’s a lot more complicated than that, especially if you want to do it right.
Getting to know your dragons
One of the things that even regular viewers of Dragons’ Den SA might not be aware of is that the entire season is filmed over the course of a couple of days. Acceptance onto the show also took place before the names of the dragons had been revealed. The SA Florist team therefore initially had to research what kind of dragons would likely be on the show and tailor their pitch to that, rather than the individual personalities of the dragons.
That said, the nature of their business meant that the SA Florist team were hopeful that Gyft CEO Vinny Lingham was one of the dragons. When that turned out to be the case, they were undoubtedly relieved, although his presence was by no means a guarantee of success. Once they learnt the names of all the dragons, they realised they’d have to put their research into overdrive.
There’s a reason, after all, the show’s called Dragons’ Den.
Stepping into the den
Given that they came in asking R3-million for 20% of the business and the dragons offered them as much — with an extra R600 000 for an employee equity fund — for 50% of the business, it should hardly be surprising that the pair went into three or four huddles in that time. No matter how much money’s on offer, handing over half your business is no small ask. Neither, in Wallander’s case, was being asked to give up 19 years of corporate life.
The show is not, in other words, the Entrepreneurial Idols it can sometimes appear to be.
Landing the deal
As an ordinary viewer, it’s also easy to forget that the point at which the entrepreneurs pitching say yes to a deal with the dragons, is not the point at which the deal is actually signed. In some ways that’s a good thing though.
“We were obviously worried that it was just TV,” Wallander told us early into the show’s run. One look at the 107 pages of legal documents that had to be processed in order for the deal to go through would’ve put quick pay to that notion, as would the speed with which the dragons moved once filming was done.
But that does notmean that the deal was signed right away. Despite the fact that Lingham led the offer on the show and that the dragons all more or less deferred to him, there was still plenty of stuff that needed to be ironed out.
“With five dragons, you’re dealing with five different points of view,” Black told us. “To try and negotiate between those five points of view means dealing with massive back and forth” between the various parties, added Wallander.
Negotiations weren’t made any easier by the fact that SA Florist is based in Cape Town, meaning that the team had to fly up to Johannesburg for meetings with most of the dragons.
Life outside of the den
All that wrangling does however appear to have been worth it. “The impact of the dragons has been immense already,” Black told Ventureburn and despite the distances involved, Wallander said that they’d all been accessible.
We’ve already mentioned the site redesign, which was led by Now Boarding, the company behind the UX and UI of the Gyft apps.
The new site, we’re told, is “a lot cleaner” with a “much smoother checkout process”.
And the other dragons are already adding value. The Creative Counsel founder Gil Oved is, for instance, providing them with valuable connections from within his own circle and Identity Partners co-founder Polo Leteka Radebe is giving them valuable insight into the role SA Florist could play in rural upliftment projects.
“The dragons have all said that this was the deal they were most excited about,” Wallander told us, and it looks like they’re approaching it that way too. One potentially very big reason for that excitement is because every cent of their investment is going straight into the business, rather than to the owners.
Heck, even the condition that Wallander quit his corporate gig, appears to have become a welcome one. “It’s been the three best weeks of my career,” he said of his entry into full-time startup life.
A side benefit of the show is the potential for collaborations with other Dragons’ Den investments. While that’s something that SA Florist partners say they’re definitely interested in, they were unable to comment on the details of any possible collaborative efforts at this stage.
Another perk of having Lingham onboard, Wallander and Black told Ventureburn, is his founder friendly approach to investment. This, they say, has allowed them claw back some of the equity they agreed to give away on the show in return for a little less investment from the dragons.
And presumably, if they can do that with a slightly larger portion of the business in their control, so much the better.
Despite its recent victories though, there’s still plenty of work for SA Florist to do.
“We’re realistic about the challenges we face,” Wallander told us. “We understand that we’re not going to take Netflorist on in price”.
That’s one reason it has a small array of products and it’s also why the whole feel of the business is different to that of Netflorist.
According to Black and Wallander, the big, warehouse-based ecommerce players in South Africa have pretty much consolidated themselves (the real moves in that space right now are the big, traditional retailers coming online). The next wave, which they’re looking to ride, might be a little more costly to the end user, but it’s a lot more bespoke and individualised.
One thing that the SA Florist team seem determined not to change however is the business’s reason for being.
“We have a firm commitment to always support the local florist,” said Wallander.