The Green Sheet Online Edition
February 14, 2011 • Issue 11:02:01
Defying the dragons
Top executives of Toronto-based UseMyServices Inc. walked away from a cool $1 million not once, but twice when they appeared on the Canadian reality show "Dragons' Den." The show features pitches by entrepreneurs to a panel of high-profile investors who may offer to invest in the ventures in return for a piece of the action.
However, failure to reach a deal on the show hasn't impeded his company's growth, according to Brian Crozier, UseMyServices co-founder and Global Business Developer. Crozier appeared on "Dragons' Den" in March 2010 and January 2011 along with company co-founder and Chief Executive Officer Joseph Iuso. Crozier indicated the company, which facilitates real-time debit transactions through online bank accounts, is busy launching new services and expanding its markets using funds raised purely through operational revenue.
Crozier feels that since he and Iuso started the company without venture capital, they know how to make it without outside investment. "So, we're very resilient people in that way," he said. "I can honestly say, from what I've seen, it's actually easier - it takes less time and is less expensive - to make a million dollars from processing payments than it is to go out and do the song and dance required to raise money."
Both times Crozier and Iuso appeared on the show, they sought a $1 million investment from the "dragons" in return for a 5 percent equity stake in UseMyServices. In the first episode, the dragons, although impressed with the revenue levels of the company, wanted a 40 percent stake in the company in return for the $1 million. Crozier and Iuso refused to relinquish so large a share of ownership.
The two co-founders were surprised to be invited back to the show several months after walking away empty handed after their first appearance. "Ours was one of the biggest deals offered on the show," Crozier said. "We're the first people to turn the 'magic million dollars' down. It created a lot of buzz for the show."
Crozier and Iuso appeared before the dragons again, this time with documentation in hand they thought proved the company deserved a higher valuation than it had received previously. They provided the names of high-stature companies with which UseMyServices would soon be doing business and information about the company's recent foray into the prepaid card arena.
"We [wanted them to see] the deals we had in the works, so they could clearly see that when our merchant services are used by these types of clients, the revenue is stratospheric," Crozier said. He noted that after the first appearance on "Dragon's Den," UseMyServices collaborated with Now Prepay, a division of VendTek Systems Inc., to launch a new distribution channel called UseMyCard (https://usemycard.usemyservices.com/home.asp) for 3V Visa and Ukash vouchers. Other UseMyServices offerings include UseMyFunds, UseMyBiller and UseMyData.
The company also established connections with additional major banks, extending its global reach into a total of 11 countries. "When a merchant plugs into our network, we're helping make it possible for them to accept payment from literally hundreds of millions of accounts around the world," Crozier pointed out.
In addition, UseMyServices plans to offer products in the United States soon. "We actually were ready to launch [in the United States] in 2006, but many banks pulled away from having real-time fund transfers and that didn't fit our model, so we backed off from the U.S.," Crozier said. "Several of the largest banks [now have] double factor authentication on real-time fund transfers, so we are able to launch in the U.S. with real-time payments and our automated e-check payment system, too."
UseMyServices' accomplishments seemed to have been lost on the dragons, who opted in their second televised meeting with Crozier and Iuso to demand a 51 percent stake in the company in return for $1 million. "I think ... they may not have understood that it was the producers who were inviting us back [to the show]," Crozier said. "They might have thought we were coming back because we needed the money and weren't able to get it."
Crozier and Iuso realized the value of what the dragons offered, not only in terms of the cash, but in regard to their connections and experience. "But at the same time, there was no way, after spending 10 years of our life building the company and going through everything we've gone through, that we were going to sell ourselves short," Crozier said.
Despite the unrealistic offers from the dragons, Crozier feels the company benefited from the brand awareness and visibility the two appearances on the show helped create. "We've had a lot of phenomenal companies contact us and do business with us as a result," Crozier said.
Still, he has to shake his head at the dragons' inability to grasp UseMyServices' true potential. "We gave them that list of household names of the largest companies in the world that we are doing business with," he said. "You would have thought they would have cleared it and said, 'You know what? This looks like the next PayPal'."
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