Shark Tank has officially crossed the halfway point of this season, but things are just getting interesting. With a full three and a half seasons under their belts, the Sharks are more confident than ever in knowing exactly what they want… and what they don’t want from their potential business partner. That means the questions are coming rapid-fire and entrepreneurs in the tank had better be on their toes! In case you missed it, here’s how this week’s business owners fared…
Double Davids request $150,000 for Coffee Joulies magic beans
First into the Shark Tank were Dave Petrillo and David Jackson, owners of Coffee Joulies, who were seeking a $150,000 investment in exchange for 5% of their company. Coffee Joulies are a nifty little invention of small silver beans that absorb heat to cool hot beverages, and then circulate the retained heat back into the beverage to keep it at optimal drinking temperature for hours. The Joulies work thanks to a proprietary chemical inside, and can be used for any type of hot beverage, or even soup or oatmeal. As usual, the Sharks were eager to hear Coffee Joulies’ numbers, and the guys didn’t disappoint. The Joulies cost $3.65 apiece to make, and they’re sold in sets of five for $50. Impressively, the men hit $575,000 in sales last year, much of which was put back into the company to fund patents and research. Kevin’s the first to put in an offer of $150,000 for no equity, but he wants a royalty of $6 per sale until his investment is recouped, and $1 in perpetuity after that. Sensing a sweet deal, Lori, Robert, and Daymond join in on Kevin’s deal. Mark decides to take the road less traveled, and instead offers Dave and David $250,000 for 12% with no royalties, with the intention of eventually selling the company. When the men go outside to talk, Kevin’s group senses the deal may be slipping away from them, and they quickly revise their offer to a $3 wholesale royalty and a $6 retail royalty. Without further ado, Coffee Joulies accepts!
Shark Tank Success Story: Litter
Last season’s fans will remember Litter, the unique body jewelry company out of San Francisco who sealed the deal with Daymond and Mark. Pre-Shark Tank, Litter’s lifetime sales were approximately $90,000, a number which they surpassed in sales within just days of the show’s airing. With a deal of Frederick’s of Hollywood recently signed, Litter is looking at making $3M this year. Congrats!
Teddy Needs a Bath seeks $50,000, gets double for 30% of teddy-washing linen company
Second into the Shark Tank was the mommy-created and owned company, Teddy Needs a Bath, seeking a $50,000 investment in exchange for 10% equity. Owner Nicole Townend was inspired to create the company by her own daughter’s dirty teddies. Teddy Needs a Bath is a reusable laundry bag for washing stuffed animals, and Nicole also has other products in development, including dryer sheets with fun scents like cotton candy. The teddy bags cost $2.25 to manufacture, and are sold retail for $14.99. For the second time this episode, Kevin’s in with his offer first: he offers $50,000 for 50%, and he wants a royalty of 10% of sales each month. Mark comes in second, recognizing that Nicole will likely need more money and offering $100,000 for 40% of the company. Kevin quickly changes his offer to compete with Mark, he’s now asking for 30% in exchange for $50,000, and he wants the 10% sales royalty until his investment is recouped, with a 5% royalty after that. But when Nicole waffles, Kevin goes one step further and drops his long-term royalty. Still, Nicole is more interested in a deal with Mark, and she counters his offer by asking for $100,000 for 30%, and offering him a 10% royalty until his investment is recouped. That sounds fair to Mark, and the deal is made!
Hancock family requests $300,000 for 12% of Sub Zero Ice Cream company
Next into the tank were Jerry and Naomi Hancock, hoping the Sharks would invest in their sweet idea, Sub Zero Ice Cream. The pair asked the Sharks for a $300,000 investment in exchange for 12% equity. Sub Zero is different from other ice cream stores because the treats are made right in front of customers with the help of a little liquid nitrogen. Liquid nitrogen brings a number of interesting advantages for ice cream store franchisees: store ownership costs and carbon footprint are lowered without a need for freezers, and it’s fun for customer to watch the ice cream being made! At first, the Sharks are impressed with Sub Zero’s numbers: $2M in sales in 2011, and $4M projected for 2012. But then the Sharks learned that recruiting a poor business partner had cost the Hancock’s $500,000 in their buyout to regain control of the company. While the Hancocks claim they’re looking for a Shark’s help to get them into prime locations like stadiums and movie theaters (Mark’s obvious wheelhouse), the Sharks aren’t convinced that Sub Zero is the right investment, and they all bow out.