The Deal You’ve Never Seen
This is a pitch that was never seen on Shark Tank. Vincent Porpiglia’s business Dream Water is an all-natural sleep supplement drink. He was looking for 250k and willing to give up 10% equity of his business. Dream Water uses no chemicals and natural ingredients such as melatonin, GABA, and L 5-hydroxytryptophan. Once you drink Dream Water it will help you drift gently off to sleep and wake up in the morning with out that groggy feeling.
They had only enough capital to produce 15,000 bottles but in one month they had sold half their inventory, and were currently in the process of producing just under 100,000 more units.
The Sharks pointed out that they were a nothing brand, and would have problems going up against a major soft drink manufacture if they chose to enter this market. Vincent pointed out that traditionally soft drink companies have bought out other companies to get their product rather than develop their own. Barbara was the first Shark to offer a deal, she offered 250k for 40% of the company but Vincent turned down the deal. Robert then offered 400k for 51% and Vincent accepted the deal.
The problem here is two-fold:
1) He can LOSE his company or be bullied out by only having a 49% share. This happened to my Uncle with his sign company which subsequently ruined him and he is still trying to recover. That’s why these are shark deals. Barbara shared a similar story a few weeks ago. Vince didn’t take the time to think it out, he didn’t take the time to find out what Robert can bring or is willing to bring to the table for the 51%. As I’ve learned more time lapses during these negotiations than we see, (as much as 45 minutes with one negotiation in particular) but I didn’t see any sort of critical thinking on his part. I think he went in knowing what he would be comfortable taking, but I think he was comfortable because he didn’t have enough information.
2) I feel like he shot Barbara down too quickly partly because she was a woman, and partly because of the scope of her expertise. I think Barbara really might have had the same limitations as has Robert with this particular product. Vincent choked up, and it’s understandable, but I don’t know that he made the best deal for himself or his company, which is a great idea. Phenomenal really.
Thoughts?
My thoughts: He shouldn’t have taken any such deal. They tend to invest in two types of people – 1) The person who needs to give no equity or 2) The person who hasn’t a clue. In this case, he could make sales without them. Get a bank loan, borrow from relatives, whatever it is… he needs the money to make inventory. Once he makes sales, he’ll have more money. He doesn’t need to give away his company. He’ll end up with nothing.
This was a bit entertaining to watch. The deal was something that shouldn’t be taken, but in Vincent’s mind I’m sure it’s better than nothing. I’m sure he’ll do fine either way.
Either way, there’s another web-only video that’s been posted. This time, it’s a “cleaning company”. Here’s the url:
http://youcrazychickens.blogspot.com/2009/09/flexsweep-never-before-seen-pitch.html
I found their website! http://www.drinkdreamwater.com Pretty cool stuff