From real-life Transformers to “two grannies in a garage,” the Shark Tank is just heating up and the latest episode was no exception. In case you missed the latest round of Shark Tank, here’s what went down:
Drive Suits seek $150,000 in exchange for 20%
First into the tank was Drew Beaumier, founder of Drive Suits, who entered the tank seeking a $150,000 investment in exchange for 20% of his company. Drive Suits are the kind of toys little boys dream of: they basically make the wearer into a real-life transformer, in an battery-powered wheeled suit capable of speeds up to 12 MPH. Unfortunately for Drew, the Sharks want to know about sales, and he doesn’t have any… yet. What Drew does have is $25,000 in cash and prizes he’s earned for appearances and costume contests he’s done with the Drive Suits. However, his provisional patent has expired and he does not have the funding for a real patent. Despite the obvious risks, Mark enters in a $150,000 for 40% offer to make 20 suits to test drive/engineer different concepts before making any major business decisions. On the flip side, Kevin wants to “go big,” which he demonstrates with a $150,000 offer for 30%, contingent on securing a partnership with a toy company. Luckily great minds think alike and enjoy a gamble, so Drew decides to go for Kevin’s offer.
Shark Tank Success Story: Voyage Air Guitar
Long-time Shark Tank fans likely remember a guest from way back, Voyage-Air Guitar, who first appeared on the show during season one when founder Jeff Cohen rejected a $1M deal with Mr. Wonderful. In Voyage-Air’s second appearance, Jeff wasn’t walking out without a deal, and he took one with Mr. Wonderful. Next on his agenda was a big-time deal with Fender Guitars, which he recently got. Voyage-Air will now be working with Fender to sell 150 guitars in 5-10 stores. Congrats guys!
PC Classes Online request $150,000 for online computer school
Next into the tank was a hi-tech solution for low-tech people: PC Classes Online, an online school designed to teach those over 50 how to use computers and software. Owner/founder David Cox asked the Sharks for a $150,000 investment in his company, in exchange for 15% of the business. David explained that the idea of PC Classes Online was born from the massive demand to teach technology to the 50+ crowd, and that he wants to bundle his service with computer sales. David plans to sell the course system to retailers for $99 wholesale, and the product would retail for $199. Unfortunately what David doesn’t have is sales: thus far PC Classes Online has only 115 members and about $35,000 in revenue, which the Sharks say is proof that the idea is a bit late to the game. While they like the idea of PC education, the think Cox’s concept is “30 years too late.” With that, the Sharks are out.
Unique search engine, Revestor doesn’t land $250,000 deal
Third into the tank was a unique technology concept, unlike anything we’ve seen in the tank before: Revestor. Founder/CEO Bill Lyons entered the Shark Tank seeking a $250,000 investment in exchange for 10% equity. Revestor is a unique search engine that focuses on real estate and uses a proprietary algorithm to make assumptions about the future value of real estate properties. Essentially, Revestor allows buyers (both commercial and single-home) to “predict” which properties will yield the greatest investment in the future. While the Sharks seemed skeptical about the proprietary algorithm, they were also interested to hear about Revestor’s revenue model. Revestor makes money through its $99/month memberships. While they like the idea of membership and long-term purchasing, they’re concerned that Bill isn’t focused on whether Revestor is meant for commercial and large-scale investors, or one-time residential buyers (he says it’s for both). The Sharks’ expertise in real estate appeared to work against Bill’s favor, and all the Sharks bowed out.
“Two grannies in a garage” make Ice Chips Candy history with $250,000 deal
Last into the tank were the “two grannies in a garage” who started Ice Chips Candy, a confection made with sugar alternative, xylitol. Grandmas Charlotte Clary and Bev Vines-Haines asked the Sharks for a $250,000 investment in exchange for a 15% share in their company. For a company that began in a garage and is made using the xylitol from a birch tree, the grannies certainly have some impressive numbers. When asked about their sales, Charlotte and Bev boasted that they have $342,000 in sales year-to-date, with a projection of hitting the $1M mark by the end of hitting 2012. Their 2011 sales were $360,000. As usual, the Sharks were interested in the math behind making the Ice Chips, and the grannies had their numbers down pat: Ice Chips cost $1.11 to make, are sold for $3.12 ½ wholesale, and retail for about $5. Their growth is a strong combination of organic and new accounts, which definitely piqued the Sharks’ interest. Charlotte and Bev claim that their hope for the Sharks’ money would be to automate the process (currently, Ice Chips are hand-made, partially with the help of their grandkids), which would bring the production cost down to just $0.77 per tin. Sensing a sweet deal, Barbara makes an offer of $125,000 for 33%, which prompted Daymond to call her a “vicious grannie,” because Charlotte and Bev would still need to raise the rest of their original ask (and additional $125,000) from another Shark. Kevin attempts to sweeten the pot by offering to go in with Barbara at 20% equity apiece. While Barbara likes the numbers, she makes it very clear that she does not want to do business with Kevin. Daymond is next to put in an offer of $250,000 for 20%, under the condition that manufacturing will be taken elsewhere. Meanwhile Mark hops on Barbara’s offer and they’re in for a combined $250,000 and 40% equity. Kevin then jumps back in, this time with Daymond at a combined offer of $250,000 for 25% equity. The grannies are ecstatic with the offers, but just when they’re about to make a decision, Daymond makes a major move: he dumps Kevin as a partner and is in solo at $250,000 for 25%. With two offers and a big valuation difference (15%) at stake, the decision is in, and the grannies decide to partner with… Barbara and Mark. An exciting end to a great round of negotiations!