They got a deal! Dragons invest in local company

The founders of a company that got its start in the North Okanagan have made a deal with the Dragons.

Cody New of Vernon and his partner Rick Sauder from the truck accessory company MULTY, made a pitch for $500,000 for a ten per cent share on the CBC show Dragons’ Den Thursday night (Jan. 4) in an episode taped last year.

The pair were seeking the investment to market their line of truck racks which can accomodate anything from bicycles, to kayaks and UTVs.

Sauder, who is an entrepreneur who has owned other businesses, told the Dragons the selling price for a UTV rack is $5,000 which has a 38 per cent profit margin in Canada, while the bike rack retails for $780 and make just over 50 per cent profit.

“They are not cheap [products], but we are competitive in the market. We are where the market is,” Sauder said.

“We are able to sell at the same price point as our competitors that are made in China except we make everything here in Canada so we can control our quality for it,” New remarked.

The products are made at a 20,000 square foot facility in Kamloops.

“We can easily scale up,” Sauder commented, adding their sales totalled about $1.2-million in 2022.

He said their profit was “zero” this year in their first or second year of operation, and they hope to make money by year three.

New, who is involved in the manufacturing part of the company that got its start in Armstrong in 2018, explained that 25 per cent of their sales were direct to consumers last year, with the rest through distribution, mostly at Canadian Tire stores in Canada and Keystone Automotive which sells to 4,000 stores in the U.S.

Sauder, who valued the business at $5-million, said they need the funds to market their products.

“That the issue. That’s where we fall apart, is where do you spend your advertising dollars? Is it money well spent? I don’t know,” he said.

After several Dragons dropped out due to concerns about the high evaluation and that other companies could copy the products, two Dragons decided to support it.

Arlene Dickenson and Michele Romanow partnered on a deal to provide $500,000.

“This product is a bit of digital gold,” Romanow remarked, saying it had “a lot of room to find customers.”

“The way to make a deal work here is to have a royalty on this product because you’re going to be building this for a long time and you have the margins to support that.”

Romanow, a co-founder of the venture capital firm Clearco, originally pledged to provide MULTY with $500,000 for 25 per cent equity plus a five per cent royalty until she got her money back.

Dickenson offered the same amount for a 7 per cent royalty until she got her money back and then 4 per cent after that, but after she made that offer, she and Romanow agreed to their partnership offer: $500,000 for a ten per cent royalty that will drop to 5 per cent once they get their capital back.

“Yeah, let’s do it. I like that,” Sauder said. Thank you so much.”

New said on the show, he drove “44 hours from Kamloops” to get to the show’s taping site in Ontario.

“Getting to the Den was a very long journey, just because our products are so big and we have so much,” New said.

“I got to fly,” Sauder quipped.

New told Vernon Matters being on the popular show was “on our bucket list, and an amazing opportunity we couldn’t pass up.”

“It was such an amazing experience. I would urge any entrepreneur apply to be on the show.”

New is also looking forward to seeing the benefits of their partnership with Dickinson and Romanow.

“Arlene and Michele will bring amazing value to our company from their proven strategies and expertise in e-commerce and marketing tactics. We are excited to see what the next couple years bring!” New told Vernon Matters.

To watch the MULTY part of the show, click here.