It’s a testament to Dragons’ Den that the TV show has become shorthand for what we used to call “interesting business ideas.” You have a startup that makes solar panels for Wi-Fi-generating doghouses? That should be on Dragons’ Den! You transform old pizza boxes into board games? Whoa! The dragons would love that! You make bluetooth-enabled seashell earrings? Wow! They’re going to totally eviscerate you!
“A lot of feedback I hear is, ‘You need a million dollars in revenue and 60,000 users.’ At that point, why would you even need seed money?” – Jo-Anne Reynolds, SpikeBee
It’s not that Dragons’ Den’s photogenic cadre of pizza peddlers, barbershop authors and Machiavellian, would-be demagogues (looking at you, Vikram) are the only gatekeepers of the land of milk and money. But there’s a certain mettle-testing allure to the pitch process. Make it out in one piece and – deal or no deal – you can return home confident in your business, knowing you slayed, or at least tamed, the dragons. One of the show’s recurring characters is the bright-eyed dreamer who’s convinced they’re sitting on a billion-dollar idea, despite the lack of either customers or revenue, or both. I can make us all fortunes, they plead. Sure, I don’t have any sales, but all I need is a wee bit of your cash. Then EVERYONE will be wearing bluetooth earrings! These characters rarely emerge with their egos intact. The dragons can provide seed money, after all, but they can’t make the world like you.
Jo-Anne Reynolds knows this character. And she knows that some fire-breathing venture capitalists might think she fits the bill, too. But she still wants the chance to put her startup, SpikeBee, in the line of fire. She wants to prove them wrong. She wants their criticism. And, most of all, she wants their cold-blooded money. A few years ago, Reynolds moved to Canada from England with her daughter. Her daughter wanted to go to summer camp – maybe pony camp, maybe rock-climbing camp – and Reynolds had no idea where to begin. She asked other parents, who all said the same thing: We just don’t have the time to look for different ideas. So year after year, their kids went to the same summer camps, blissfully unaware that there was a pony camp they could be going to instead. A light went off in Reynolds’s head. In January 2015, she put $100,000 of her own money into developing and designing a website that would list all available summer camps and let users search the platform by age, location, cost and date range, to name a few. Her market research shocked her: this is a $90-billion industry in North America alone, and one with no dominant leader, she discovered. She wanted in.
“I want SpikeBee to be the Amazon of seasonal camps and activities,” she says. “I want every country in the world, and every parent in the world, to know about it and use it as the go-to website when they’re thinking about what to do with their kids.” But while her customer base has expanded, she’s seen no real revenues. Now, she thinks she needs the help of an angel investor to grow her business. “What comes first? It’s a chicken-or-egg situation,” Reynolds says. “To get an awesome team to take it to the next level, I need the funding to pay them.” But she wants more than just money: she wants mentorship and connections. So Reynolds contacted Hannah Cree, the general manager of VA Angels’s Calgary chapter, to gauge her readiness for the firing line. Cree used to be the director of AcceleratorYYC, a part of which merged with Startup Calgary, and she ran its Basecamp program, which she calls “financial bootcamp.” VA Angels is a consortium of more than 140 high-income angel investors looking for the next big opportunity. It has chapters across Western Canada (and one in Phoenix, Arizona) and hosts events where it hears entrepreneurs pitch ideas. Sure, “angels” isn’t quite as foreboding as “dragons,” but that doesn’t mean they’re thin-skinned, or that they don’t unleash fiery criticisms. “Going after money is just like starting your business,” Cree tells Reynolds. “You have to hustle, you have to do research and it’ll take a lot of time. There’s a point at which you have to decide, ‘Can I continue to bootstrap this?’ ” The two discuss the fundamentals of SpikeBee. By the end of 2015, Reynolds says, the site featured about 25,000 camp listings from vendors across the world. It’s attracting 1,300 users a week. Through the beta registration process, SpikeBee made about $20,000. Apart from the temporarily suspended 2.49-per-cent registration fee, Reynolds plans to grow SpikeBee by selling premium real estate on the website and in confirmation emails, which about 90 per cent of customers read, to adverstisers. Cree asks for the revenue projections for next year. When Reynolds says she expects it to be $500,000, there’s a dramatic pause on the other end of the line. “That’s a big jump,” Cree says. “But it’s a $90-billion industry in North America alone, and…” Cree interjects: “Everyone says, ‘Oh, it’s a billion-dollar industry!’ You have to understand that we get at least 10 pitches a month and a lot of those things that entrepreneurs say time and time again, investors literally roll their eyes at,” she says. “There are two things you should never say to an investor: ‘We’re going to get, say, one per cent of a billion-dollar industry,’ or, ‘We’re the Uber or the Facebook of…’ ” (Reynolds is probably glad she hasn’t made the Amazon comparison yet.) Cree adds that VA investors pay for the privilege of membership, and expect to hear pre-vetted, top-quality pitches. “At this point, your users and the revenue are so low that I don’t know if you’d make it through deal-screening at VA Angels,” she says. Sensing dejection, perhaps, Cree changes her tone. “Don’t get me wrong – I think what you’re doing is right on target. But they’ll want to see more users and definitely more revenue. [But] I think you’re at a tipping point. If you can see some more upswing in your revenue and customers in the next few months, then you could be in play for VA money.” Reynolds exudes a common frustration – I can’t grow if I don’t have the money! “A lot of feedback I hear is, ‘You need a million dollars in revenue and 60,000 users,’ ” she says. “At that point, why would you even need seed money?” But here’s where Cree hints at SpikeBee’s advantage. Every angel is particular, but apart from the brass tacks – revenue, customers – “one of the top [concerns] is the entrepreneur,” Cree says.
“Do they have drive? Have they bootstrapped it themselves? Your hustle is really important.” And, of course, it has to be a well-structured deal. The entrepreneur needs to be honest about how long it’ll take the investors to be reunited with their cash. Angels are actually simple creatures – they just want their money back. Reynolds has the hustle, no doubt. She’s built SpikeBee out of nothing. She has the social media presence of a rich and handsome teenage musician. She’s a regular TV guest, and after every appearance her user numbers jump. And she’s found a market. Reynolds is more than just a person with an idea to make you say, “You should be on Dragons’ Den!” She’s the kind of person that would leave the den in one piece – maybe not with a deal, but certainly with a renewed sense of purpose, angels be damned.
Follow SpikeBee as it…
- Markets SpikeBee worldwide. “Word of mouth has helped us, and my following on social media has expanded rapidly. But I want to convert those passionate followers into users of the website.”
- Builds its technical team and digital infrastructure. “I need a dreamer who can understand that I’m more than a woman with a website. I want to change the way our entire society uses its free time.”
- Packs its bags? “We are super proud Canadians and we love Alberta. But the ease of access to people is so much greater in the U.S.”