Key Points:
- Investment: £115,000
- Investor: None (No deal secured)
- Equity Offered: 17%
- Business: Enviro-Thaw (granular and fluid de-icer)
- Target Audience: Airports, councils, retail outlets, stud farms
- Challenges: High product cost, competitive market, ambitious sales targets
The Pitch
Karina Oldale, representing the family-run business Enviro-Thaw from Yorkshire, presented her innovative de-icing product on Dragons’ Den. Seeking £115,000 for a 17% equity stake, Karina showcased a granular and fluid de-icer that outperforms traditional rock salt by working at temperatures as low as -55%, being 90% less corrosive, and being safe for pets and children. Her current customer base includes airports, councils, retail outlets, and stud farms.
Financials and Offer
Karina detailed the financial journey of Enviro-Thaw:
- Year 1: Turnover of £27,000 with a loss of £64,000.
- Year 2: Turnover of £192,000, breaking even.
- Year 3: Turnover of £923,000 with a profit of £203,000.
Karina projected significant growth, attributing the potential leap to a modification requested by a major client, which could lead to a substantial order of 130,000 tonnes. Despite the impressive projections, Karina revealed the family had invested £240,000 into the business and currently held stock valued at £265,000.
Challenges Highlighted by the Dragons
The dragons raised several concerns:
- Cost Competitiveness: The product is significantly more expensive than traditional rock salt, posing a challenge for market acceptance despite its benefits.
- Sales Targets: Maintaining exclusive distribution rights requires achieving an ambitious target of 40,000 tonnes annually, translating to a turnover of £11 million.
- Market Penetration: Securing large contracts with airports or other major clients is crucial but uncertain.
- Investment Risk: The dragons perceived a high risk due to the significant investment already made and the high stock levels without guaranteed sales.
Conclusion
Despite Karina's passionate pitch and the innovative nature of Enviro-Thaw, the dragons found the risk-reward ratio too steep. Although one dragon offered the full investment amount, it was contingent on taking a 50% equity stake, which Karina could not accept. The episode concluded with Karina leaving the den without a deal but with determination to prove the dragons wrong.
Enviro-Thaw’s journey highlights the challenges of scaling a business with high operational costs and the critical importance of aligning investor expectations with business realities. As Karina ventures forward, the market will watch to see if her optimism translates into tangible success.
Post Den
After appearing on Dragons' Den, Enviro-Thaw experienced both highs and lows. Initially, the company reported a massive 700% increase in turnover and won the Business Growth Award at the Barnsley & Rotherham Business Awards (Rothbiz) (Rothbiz). Despite this early success, the company struggled with sustainability in the long term.
Enviro-Thaw continued to operate for a few years but ultimately faced financial difficulties. By 2014, the company and its associated ventures had dissolved (Blackestfest). While Enviro-Thaw had potential and early accolades, the challenges in achieving sustainable growth and meeting ambitious sales targets proved too significant.