- Popular knee-high boot socks sold online; a stylish clutch for essential items; a way for kids to create and personalize lunchbox designs; customized chocolate bars; artisan cheese and glazed donut sandwiches.
- In this episode of Shark Tank, several entrepreneurs presented their business ideas to the Sharks: Mark, Barbara, Kevin, Lori, and Robert.
The first pitch was by Yubo, a company that manufactures personalized lunchboxes that are easy to clean. The owners, Paul and Cyndi Pedrazzi, were seeking $150,000 in exchange for a 15% stake in their business. Yubo had been selling its products for four years and had 100 retail stores. They projected sales of $250,000 for the current year and had invested $350,000 in their venture. They also had a patented design and a royalty agreement with an industrial designer who owned 20% of the company. Mark decided to opt out due to issues with the perpetual royalty. Barbara was not interested because she felt the lunchbox size was too big. Kevin offered $150,000 for a 10% stake with a royalty deal similar to the designers. Robert offered $150,000 for a 30% stake, and Lori offered $150,000 for a 20% stake. Kevin later revised his offer to $150,000 for 20% but would decrease to 12.5% if the amount was paid within 18 months. Lori modified her offer to $150,000 for 15%, with $150,000 to be paid back in 15 months. Robert finally offered $150,000 for a 15% stake, matching the entrepreneurs' initial request. Kevin and Robert decided to team up, and the couple accepted their joint offer.
The second pitch was for PurseCase, a mini purse cell phone case that also carried essential items. Founders Jenn Deese and Kelley Coughlan sought a $55,000 investment in exchange for a 12% stake in their business. The product had a unique feature-a pocket to carry cash. The company had generated $30,000 in sales within three months and projected sales of $240,000 for the year. The manufacturing costs were $4.42, and the wholesale and retail prices were $15 and $38, respectively. The profit margins were 88% for direct-to-consumer sales and 71% for wholesale. PurseCase had an equity partner, Dow Industries, which provided a $1 million credit line. However, Robert opted out because he had seen similar products in Europe, and Barbara was not interested in the product. Mark did not like the tech accessory business, and Lori offered $55,000 for a 15% stake, which the founders accepted.
Next, Joe Dauenhauer presented his business, Chocomize, which specialized in custom manufactured chocolate bars. He was seeking a $500,000 investment in exchange for a 20% stake. The company had achieved $440,000 in sales the previous year, with a slight dip due to a manufacturing transition. The goal was to target corporate deals and potentially seek an acquisition in 3-4 years. The cost of production was $2, and the bars sold for $6.50. Kevin made an offer to Joe, proposing a $500,000 investment plus a 25% stake to start a new chocolate company together. Robert, however, dismissed Joe's sales figures and did not believe the market was significant enough. Mark saw no uniqueness or differentiation in the product, and Barbara was not impressed with the packaging. Lori did not see the potential for growth and opted out. Ultimately, Joe rejected Kevin's offer.
The fourth pitch was for Grace and Lace, a business founded by Melissa and Rick Hinnant that specialized in knitted boot socks. They were seeking a $175,000 investment in exchange for a 10% stake. The company had generated $800,000 in sales two years ago and $1.125 million in the last 12 months. Their sales were primarily online, but they were also present in 230 stores. They utilized social media marketing and had a significant following of 34,000 on Facebook. The product sold for $34, with a production cost of $5 and profits of $300,000. Lori did not have a personal connection to the product and opted out. The founders were looking for a strategic partner to help them reach their goal of $100 million in sales. Barbara offered $87,500 for a 5% stake, Kevin offered $175,000 for a 20% stake that would drop to 10% once the investment was paid back, and Robert offered $175,000 for a 10% stake. Barbara wanted to collaborate with the other Sharks, but Robert rejected the idea. Robert was unhappy that the male Sharks wanted to consider Mark's offer, and he subsequently opted out. Mark then offered $175,000 for a 10% stake. Barbara revised her offer to match Mark's, offering $175,000 for a 10% stake with half as a line of credit. The founders ultimately chose Barbara's offer.
In an update on a previous episode, Marc Newburger and Jeffrey Simon of Drop Stop reported significant success after appearing on Shark Tank. Their car safety product had achieved $5 million in sales within five months and projected $15 million in sales for the next year. They had secured a deal to sell their product in 3,500 Walmart stores.
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