Is it Safe to Go Back in the Water? A Life Raft for Entrepreneurs
Dolphin’s Den greetings! Let’s see, new guest Shark with an accent – Check! Knickknack – Check! High-minded save the environment product – Check! Food item – Check! Alrighty then, it must be time for Shark Tank Episode 3… who received seed-stage funding, and who didn’t?
Pitch #1 – Sparketh
Company Category: Online Art Application
Bait: $100,000.00 for 8% equity ($1.25 million valuation)
Bites: $100,000.00 for 20% equity ($500,000.00 valuation) from Barbara Corcoran and Daniel Lubetzky, contingent on the founders showing they can make a profit within six months.
Shark Rating: 1 Shark Bite
Dolphin’s Den – “Let me get this straight, you want to reduce the value of our business by 60%, take 20% of it, but make your $100,000 investment contingent on us showing a profit within six months though we haven’t been profitable in our first six years of business, prior to you two multi-multi millionaires investing $50,000 each? We’ll take it!” Huh? What is so special about this specific $100,000.00 that Sparketh is willing to do this deal? What will they use the money for, and how will they generate any sales without this $100,000.00 deployed as working capital? As an expert in aquatic scents, something smells fishy…
Pitch #2 – Oat Haus Butter
Company Category: Food
Bait: $375,000.00 for 5% equity ($7,500,000.00 valuation)
Bites: 5 bites… of the butter, but no bites on the business
Shark Rating: 0 – Soupy butter = Shark Repellent
Dolphin’s Den – Being a self-proclaimed Shark Tank show reviewing expert, I was stunned that the Sharks churned (you see what I did there) this company down. They seemed to have the formula down – telegenic, cute pitch; emotional backstory; good sales growth; solid margins, and a Shark specializing in the natural health food space (Lubetzky). Daniel had some of the best advice this Dolphin had ever heard on this show when he said to Oat Haus, “When you build something, you should build it because you love it and not for the exit.” Sometimes entrepreneurs pitch a project to the Dolphin’s Den and only focus on their “exit strategy” before even showing a profit or having growing sales. In their mind, there is a mythical stadium filled with their competitors and bored billionaires ready to have a bidding war to offer seed-stage funding to their business. It is like focusing on the Prenup Agreement before marriage, it is probably prudent, but it kills the romance.
Pitch #3 – Flaskyflowers.com
Company Category: Wedding/Party Knickknack
Bait: $50,000.00 for 10% equity ($500,000.00 valuation)
Bites:
- $50,000.00 for 20% equity ($250,000.00 valuation) from Lori Greiner
- $75,000.00 for 30% equity ($500,000.00 valuation from Kevin O’Leary and Mark Cuban combining with Lori)
Shark Rating: 3 Shark Bites (Plus another from Barbara for $50,000.00 but also included turning over 2 of the couple’s 7 children – Sharks are gonna shark…)
Dolphin’s Den – Flaskyflower’s is a fun product that allows a wedding or party guest to get inebriated by secretly drinking from their bouquet holder. The owners are a lovely couple with 1500 units in stock, $21,000.00 in total sales but were infectious in their attitude and commitment to their product, and that actually penetrated the sharks’ tiny hearts and got them an offer. In this instance, the shedding of equity for expertise is the exact right move, and the product needs to fly off the shelves the second this episode airs as I doubt it will be more than a novelty item in the subsequent years.
Pitch #4 – Incredibleeats.com
Company Category: Food Or Flatware?
Bait: $500,000.00 for 7% equity ($7,142,857.14 valuation)
Bites:
- $500,000.00 for 35% equity ($1,428,571.43 valuation) from Kevin O’Leary
- $500,000.00 for 20% equity ($2,500,000.00 valuation) from Mark Cuban
- $500,000.00 for 15% equity ($3,333,3333.33 valuation) from Lori Grenier (Accepted)
- $500,000.00 for 25% equity ($2,000,000.00 valuation) from Daniel Lubetzky
Shark Rating: Feeding Frenzy – 4 Shark Bites (no edible spork needed)
Dolphin’s Den – Another environmentally conscious product, but this one got the Sharks circling. Incredibleeats is a clever plastic utensil substitute that aims to reduce the ever-growing waste of used plastic items dumped in our landfills and oceans. Incredibleeats takes a page out of the song “Candyman” – “Talk about your childhood wishes, you can even eat the dishes.” Dishes are not on the menu yet, but spoons, forks, sporks, and straws are. Perhaps the business will end up hampered by its pricing being 20 times more than standard plastic utensils, but who knows… Congress and the U.N. will probably criminalize all plasticware and mandate edible utensils someday anyway, and Incredibleeats will be a multi-billion company.
What Have You Learned About Dangling Products in Shark-Infested Waters?
Our goal is to help entrepreneurs understand the seed-stage funding process. Like the murky waters of the deep, getting the capital you need to grow your new business is a risky endeavor. Having lost a battle or two ourselves, we’ve come up with another option for folks with the right products; we call it Media Funding, and it is a non-dilutive approach to financing your business expansion.
Our media funding experts are here to talk with you about our early-funding options for direct-to-consumer (DTC), direct response, and subscription-based e-commerce businesses. We also can connect you with people you can trust in this deepwater industry.
Complete our Contact Us form to get more information, or just pick up the phone and give us a call – 908-832-5433.
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