Ecommerce store, SA Florist may not have received the largest investment from Dragons’ Den South Africa, but it was one of the more interesting stories.
For one, all five of the Dragons came in on the deal, a rarity on the show. Founders Nicholas Wallander and Fraser Black were also made to sweat for it, going through one of the longest pitches in the show’s global history.
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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 shut down her own retail operations because of escalating costs.
The R3.6-million it netted, in exchange for 40% equity, therefore looked set to be a game-changer.
At Tech4Africa Cape Town, Black and Wallander explained what happened once the cameras stopped rolling and what the Dragons’ investment had allowed them to do.
Smaller deal, big growth
Straight off the bat, Black and Wallander pointed out that the deal you see on TV isn’t necessarily the one that the business will actually end up getting.
“There’s a deal on TV and there’s a deal in the boardroom. There are two different deals,” says Black. The show is great for PR, but there’s still time to negotiate and do proper due diligence after the episode has been filmed.
While the amount of equity invested was negotiated down to R3-million for less equity, with one less Dragon onboard, it still allowed SA Florist to scale very quickly.
Since December 2014, the company’s gone from one to seven full-time employees, moved into new offices in the Woodstock Exchange and completely revamped its offerings across desktop and mobile. It’s also moved beyond just selling flowers and into various artisanal products, including wine and chocolate.
According to Wallander, starting out in flowers actually prepared them pretty well for branching out into other ecommerce avenues.
“Flowers were a great testing ground for us, because if anything’s going to get damaged or wilted in transit, it’s flowers”, says Wallander.
From an investment perspective, the business also seems to be in healthy shape.
“Right now we’re heading towards Series A,” says Black. “We’ve more than doubled our valuation in a matter of months”.
That’s not to say that it’s been all rainbows and puppies with the Ddragons. This is business after all.
The example the SA Florist founders point to is a disagreement two of the Dragons had as to whether the company should rebrand from SA Florist.net. One Dragon felt that people were confusing it with Netflorist, while another felt that the brand had established itself as a household name. In the end, they went for compromise and dropped the “.net”.
Black’s pretty philosophical about it, noting that anyone who has multiple investors has to understand that there will be differences of opinion between them. That’s not necessarily a bad thing, he says, especially if you can take the best advice from both.
Indeed, the SA Florist founders have learned that advice from their investors can be just as crucial as the actual funding they put in.
“It’s not just about the money, it’s also about the mentorship,” says Black.
But the founders are also now starting to see the benefits of the Dragon’s wider networks. For instance, their corporate offering — a sort of internal online florist for big companies — is starting to get off the ground. And many of the doors into corporate South Africa are being opened by Dragon and The Creative Counsel founder Gil Oved.
Even with people as powerful as the Dragons behind it, though, SA Florist hasn’t been immune to the pressures of competition.
“Don’t underestimate the market leader’s ability to make your life tricky,” says Wallander. As he points out, everything that SA Florist can do, Netflorist can do an hour later with considerably more resources.
That’s one reason it’s never tried to directly go up against Netflorist, competing on its ability to connect independent florists with customers and to provide better, more nimble delivery options to those customers.
It’s also slowly entering other verticals and looking at international expansion.
As to what future startups looking to get investment should know, Black and Wallander both advise knowing your numbers backward and being prepared to walk away from any other interests you might have.
And that rings true whether your potential investors are dragons in a TV studio or dyed-in-the-wool VCs in a boardroom.