A Nanaimo-based business has received a big cash boost from an appearance on CBC’s Dragons’ Den television show.
Morgan Carey, president of Real Estate Webmasters, secured a deal for a $2-million investment in exchange for a five per cent equity in his website development business — a $40-million valuation — after winning over a majority of high-flying entrepreneurs who act as judges on the show.
The Dragons — Arlene Dickinson, Jim Treliving, David Chilton, Michael Wekerle and Vikram Vij — hear pitches from businesspeople seeking investment for their service or product ideas.
Carey’s business caters to real estate companies by developing high-end, customized websites for each firm and driving traffic to those websites.
At first, several of the Dragons, particularly Dickinson, a marketing executive, were skeptical of Carey’s ask of $2 million for four per cent of the business.
Vij, a restauranteur, asked what guarantee a customer would have on getting a return on their money. “You have no guarantee,” Carey replied. “My job is to drive traffic and make you look fantastic.”
“You have so much competition, though,” Dickinson said.
“I actually don’t,” he rejoined.
However, the Dragons’ ears began to prick up when Carey told them the business had aggregate sales worth $30 million, and he expects $15 million in gross sales in 2015.
Treliving, who founded Boston Pizza, said he was interested in making a deal, but wanted more equity, offering $2 million in return for 10 per cent of the company.
Chilton, a bestselling publisher and former stockbroker, offered Carey the cash in exchange for a 10 per cent royalty on sales until the investment was returned, followed by a one per cent royalty after that.
Wekerle, a financier, undercut Treliving’s offer with an offer of $2 million in exchange for six and two-thirds per cent.
Morgan rejected the initial offers out of hand, and counter-offered a five per cent stake in the company. That sealed the deal for Treliving and Wekerle, who agreed to partner together on the offer.
That did not sit well with Dickinson, who had said she was “out” early on. “You guys got sold,” she muttered, later adding incredulously: “You guys, he makes websites.”
Carey aims to expand from 100 employees to 1,000. The “deal” has to go through a round of due diligence.