The owners of a North Okanagan company offering innovative truck rack products have struck a deal with the Dragons.
Cody New and his business partner Rick Sauder appeared on the CBC-TV show Dragons’ Den Thursday evening, hoping to come to terms with one or more of the panel of high-profile investors.
The company, MULTY Rack Systems, makes a variety of truck racks for loading bicycles, UTVs, kayaks and other equipment. Its three main products are a bike rack that can carry up to six bicycles and fit almost any pick-up truck, a headache rack (protects back window of truck), and a UTV rack system.
Components of the MULTY rack products are manufactured in Armstrong, while the company’s main manufacturing plant is located in Kamloops.
“I drove 44 hours all the way from Kamloops (to Toronto) just because our products are so big and we have so much,” New said on the program.
“We’ve worked very hard for the last couple years designing a product that is nothing like what’s out there on the market right now,” he told the Dragons.
New is the manufacturing expert among the pair, while Sauder referred to himself on the show as a “serial entrepreneur” who has built up multiple multi-million dollar companies.
“We’re able to sell at the same price point as our competitors that are made in China, except we make everything here right in Canada,” New said to the Dragons.
Where the two lack in expertise is marketing, which is why they came to the Dragons asking for $500,000 in exchange for 10 per cent of the company.
“If I were to Google ‘bike racks,’ would yours come up?” asked Dragon investor Manjit Minhas.
“Nope. That’s the issue,” New replied, while Sauder admitted they need all the marketing help they can get.
Sauder told the Dragons the company generated $1.2 million in sales in 2022 (the episode was recorded in May 2023) and they hoped to sell $1.5 million worth of products in 2023.
“We have 20,000 square feet of facility. We can easily scale up,” Sauder said.
Not all of the Dragons were swayed by the business partners’ pitch; Dragon Wes Hall said their $5 million valuation was too high and bowed out. Vincenzo Guzzo said he was out because the product was too easily replicable by competitors (Sauder had explained that their products were difficult to patent).
However, New and Sauder found a partner in Michele Romanow, who offered $500,000 for 25 per cent equity plus five per cent in royalties until she got her money back.
Dragon Arlene Dickinson then offered $500,000 with no equity coming back, but a seven per cent royalty until she got her capital back that would drop to four cer cent thereafter.
With Sauder saying 25 per cent of the company was too much to give up, Romanow and Dickinson teamed up with a joint offer of the half million with 10 per cent royalty until they got their money back, dropping to five per cent afterwards.
After a moment of deliberation, Sauder told the Dragons: “Yeah, let’s do it, I like that.”
Sauder and New started the company in 2018. When they appeared in front of the Dragons last summer, they said they were perhaps a year away from turning a profit. With half a million dollars secured from the Dragons in Thursday’s episode for marketing, folks may see the MULTY brand popping up in adverts as the company looks to get a leg up on a competitive market.
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