Dragons’ Den episode 3: aviation, investments and weaves

By now, keenly eyed viewers will have sussed out that the Dragons’ Den South Africa doesn’t air exactly as it was filmed. Were that the case, the dragons would either have to have the knack of wearing exactly the same clothes week in and week out, or their wardrobes would have to be incredibly boring. Creative Counsel co-founder Gil Oved confirmed this to Ventureburn in a recent interview (look out for it on the site soon), saying that “we see them [the episodes] for the first time when they air.”

Judging by the way things have going, Oved’s guess that the producers are “building up to a crescendo” seems pretty much on the mark. Overall, the quality of entrepreneurs on this, the third episode of Dragons’ Den SA seemed to once again level up from the previous episode, although there were still a good few awkward moments.

Sky high ambition

First into the den was Shaun Ledlie of Kershal Aviation, a company that provides online refresher courses for the aviation industry. Given the field he’s in, it’s hardly surprising that the number Ledlie was asking for was pretty big: R3-million in exchange for 15% of the company.

Citing huge anticipated growth in the industry, Ledlie told the dragons that his business had the potential to achieve massive returns. Unlike many of the entrepreneurs who pitch on the show, Ledlie was looking for investment in Kershal’s growth, rather than in an idea or launch.

Things started to come unstuck however, when it emerged that investing in that growth would really mean investing in industry education and marketing. The fact that the company had made a cumulative loss of R5-million also made the dragons more than a little wary.

“I just smell a rat,” said Gyft founder Vinny Lingham, “and if I can find it, great and if I can’t, good on you”.

Ledlie’s analogy of the platform as a “magic fridge” that always fills itself didn’t seem to sway the dragons from their opinion. He did however manage to attract an offer of R3-million in return for 50% of the business from Oved and Lingham (subject to whole pile of due diligence investigations, of course).

Clearly believing the business was capable of bootstrapping its way forward, Ledlie turned them down.

The downside of props

Pitching decks, visualisations and props can all be of massive use for a pitching entrepreneur, but they can also do their cause massive amounts of harm if used incorrectly. Just ask Sinclair Mhlala, who was pitching his idea for a stove that allows children to cook safely…using a speaker magnet.

The university student was asking for R750 000 in return for 30% of the company, after finalising the idea just a week before pitching to the dragons. Add in the fact that the prop he’d brought in was a speaker magnet ripped out of his room’s hi-fi unit and you have an idea that was on shaky ground from the get-go.

While the dragons did spend the aftermath of Mhlala’s pitch laughing, they were impressed by the nobility of his idea, but none were willing to put their money behind it.

Getting into the garment game

According to some estimates, the South African retail clothing sector is worth R50-billion a year and indirectly employs 80 000 people. It’s a pretty competitive therefore, but offers more than a few opportunities to people who get into it successfully.

Fikile Mkhabela of Shana designs was clearly hoping that the dragons could help her do just that when she asked for a R250 000 investment in return for 25% of her business, which caters to the clothing needs of full-figured plus size women.

While Mkhabela’s business is still at a very early, near-conceptual stage, she does claim to have a few clients and to be well-known within the plus-sized community. Unlike other players in the market, she hopes to get her designs into the mainstream retail sector.

Uncertainty around how to get into the clothing retail sector, who would actually produce the clothes and a lack of any clear marketing plan though had the dragons balking in their seats.

“I think what you’re trying to do, there’s definitely demand for, I have no doubt about that,” said Identity Partners founder and VC Polo Radebe, “my worry is that the business has not been sufficiently developed for you to determine the amount of financing that you will require”.

Ultimately, all the judges could see that Mkhabela has massive potential, but she simply wasn’t prepared or advanced enough in her business to get any backing from them.

She did however walk away with an offer from Gunguluza Enterprises & Media’s Lebo Gunguluza for a spot in his annual Durban July fashion show.

Made to order matric jackets

Sticking with the fashion motif, Amnei Steyn pitched the dragons her range of custom-made matric jackets. Essentially a custom embroidery business, Steyn was looking for R380 000 to her expand her business from Cape Town to the rest of the Western Cape.

Ultimately that lack of differentiation cost her.

“I think you can make a lot of money out of this for yourself if you sell hard and work hard,” said Oved,” it’s a brilliant one man show business, definitely not an invest-able business for me”.

There were also concerns around the fact that Steyn would’ve used the capital to buy stock. “It’s not the kind of investment that requires an equity investment at R380 000,” said Radebe.

Weaving your way to wealth

One of the great South African entrepreneurial success stories is that of Herman Mashaba, who founded the Black Like Me skin and hair-care range.

While the parallels between him and Matshego Piko, of Masego Hair Affair, probably seem fairly surface level right now, they would probably be thrust into the spotlight with a substantial investment from the dragons.

Masego Hair Affair, which is based in Kimberly, sells human-hair wigs aimed at women and children who have lost their hair due to illness but also caters to those who want them for cosmetic reasons. Piko asked for a R200 000 cash injection in return for 10% equity in her company.

Lingham raised concerns around the ethics of the trade, with Piko saying only that she takes the word from her supplier that the human hair used in her wigs comes from an ethical source.

Other dragons meanwhile were concerned around the uniqueness of her offering and her R2-million valuation.

For those reasons and more, all the dragons were out.

Putting property’s problems right

Last into the den was Jaco de Lange, of PropCare, an app that provides a platform for property owners to find reliable, user-rated, locally-based property service providers. These range from garden maintenance to handymen, plumbers and electricians.

That’s selling it a bit short though. The company also provides all-round home care solutions for young investors looking to get into the rental market as well as helping people make their homes more efficient and eco-friendly.

Perhaps the most realistic of the entrepreneurs in episode three, de Lange asked the dragons for R300 000 in return for 30% of his company.

Despite some concerns around de Lange’s inability to articulate what exactly it is his business does, he managed to keep at least some of the dragons interested. In part that must’ve been because he’d had zero cancellations on the product at the time the episode was filmed.

That said, Oved expressed doubts around the business’ scalability, largely because it’s so specialised that its IP can’t be transferred easily. With four of the dragons out, de Lange’s chances didn’t look great.

But then Vinny Lingham came to the party, drawing on his own experiences as a property owner in South Africa. He therefore offered de Lange the R300 000 he wanted for a 35% stake in the business.

Sometimes it’s about knowing when to say yes.