National Post (National Edition)
HOCKEY GEAR-MAKER SHOOTS, SCORES
Each week, Financial Post contributor Mary Teresa Bitti revisits CBC’s previous week’s episode of Dragons’ Den. She captures what the cameras didn’t and in the process provides a case study for readers, zeroing in on what pitchers and Dragons were thinking and what the challenges for the deal are going forward. The pitch Inventors Emily Rudow and Kayla Nezon came to the Den to pitch Oneiric Hockey, which develops innovative, patent-pending equipment for young hockey players. Rudow hit on the idea for its flagship product — an all-inone base layer pant designed to give young hockey players extra protection while making dressing easier — in a fourth-year new venture course at Wilfrid Laurier University.
As hockey players, they understood the need for convenience and safety in equipment. “I’ve been playing hockey since I was eight,” said Rudow, who met Nezon at the digital marketing publisher they both worked for.
The pair researched and tested their product for four years, creating more than 80 samples of what is a new category, a hybrid between the base layer and hockey equipment.
“We didn’t want to rush to market with something I wouldn’t wear as a hockey player. I would not try and get kids to wear something I don’t love,” Rudow said.
A seamstress helped create the first prototype, which they took to custom technical apparel manufacturer Niko Apparel Systems in Hamilton to refine, then they signed on with a California agent that works with brands such as Adidas to find a quality manufacturer in China.
In 2015, Rudow and Nezon received the Ignite Capital Award in the Youth Entrepreneur category as well as JumpStart funding through Laurier’s Schlegel Centre for Entrepreneurship’s partnership with FedDev Ontario/Ontario Centres of Excellence. Early the following year, they received their first shipment of equipment and began doing grassroots selling at hockey tournaments.
May 2016 was a particularly busy month: They pitched the Dragons on May 2 and three days later won the Unlock Your Big Idea Pitch Competition award for Best Innovation for Small Business, followed by a win at the Golden Triangle Angel Network’s Start funding competition, which netted $10,000.
“It’s also when we launched the business and began letting people know the product was available,” Rudow said. Throughout the summer, they focused on building brand awareness and began lining up purchase orders with independent retailers. Oneiric has two models (one for players; one for goalies) that retail for $129. Profit margins for direct sales are 54 per cent; retail sales net between 22 and 25 per cent. The deal The women asked for $50,000 for a 20 per cent equity stake valuing the business at $150,000. At the time of the pitch, sales were around $10,000. In addition to raising money to fund marketing initiatives, instore displays and production, they saw it as an opportunity to raise awareness for their product.
They hoped to tap into Joe Mimran’s branding and retail experience. But, though he made an offer, he wanted too much of the company (40 per cent). Instead, they accepted an on air deal from Manjit Minhas, who was willing to forgo an equity stake for five per cent royalty for five years, at which point they could renegotiate. The deal has since been revised and is in due diligence.
With Oneiric now available in 11 independent retail stores in Ontario, the pair have sourced a new manufacturer in Vietnam. Oneiric is moving into adult sizing for its goalie product and is working on new products and versions of existing products. “We want Oneiric to be a brand, not just one product,” Rudow said. Revenue is on track to hit $50,000 to $60,000 this year.
It also received its notice of allowance for the patent, which will allow them to explore licensing options.
Oneiric’s next steps are to grow in Ontario and refine the retail model before expanding into other Canadian provinces and a few key hockey states, where the majority of online sales come from. A Dragon’s point of view Minhas is impressed with the founders, their ingenuity, the quality of the product and their go-to-market strategy. “They are two amazing, innovative young women who had an idea and were able to bring it to fruition. They have created something brand-new and innovative that is very functional and could change the hockey equipment industry,” she said. However, she said, it is a very competitive space and the women are competing against large companies. “It won’t be easy to get into big retailers, which I think they need to do to get the big volumes. I like their approach to starting with the smaller retailers to get all the kinks worked out before going mass market. This will also help them prove demand.” An expert’s opinion “Anything you can do to limit the amount of equipment you need as a hockey parent is always appreciated,” said John Cho, partner at KPMG Enterprise. “I’m curious about the $129 price point versus purchasing separate components. Hockey is an expensive sport and children are always growing. If consumers have to pay a premium for convenience, this could reduce some of the target audience.”
He also thinks targeting niche retailers is a good place to start before they have to compete against big brands at big retailers. Cho said the pair will need to leverage the endorsement they got from former NHL pro Theo Fleury. “It’s a big community but it’s also a small one in that once kids and parents see it in change rooms they’ll talk about it.”
THEY ARE TWO AMAZING, INNOVATIVE YOUNG WOMEN WHO HAD AN IDEA AND WERE ABLE TO BRING IT TO FRUITION. THEY HAVE CREATED SOMETHING BRAND-NEW AND INNOVATIVE THAT IS VERY FUNCTIONAL AND COULD CHANGE THE HOCKEY EQUIPMENT INDUSTRY. — MANJIT MINHAS, ENTREPRENEUR