In The Shark Tank

This weeks episode Shark Tank featured entrepreneurs who badly needed the help of the sharks to bring their company to the next level.

First into the tank was Notehall a company launched by D.J. Stephen and Sean Conway out of the University of Arizona. Their website created a marketplace for university and college students to sell their class notes and study guides. Students would post their class notes and other students would pay $4.90 for the rights to them. Notehall would give 40% of the sale to the author of the notes and keep the rest has a transaction fee. They were seeking $90,000 for 10% of the company, the money would help them expand to 24 universities this year.

A bidding war broke out between the sharks, Kevin O offered $90,000 for 51% of the company. Barbara quickly offered $90,000 for 50% of the company. The guys countered with 15% for $90,000 but with a unique offer attached, if within 24 months they didn’t hit $1 million worth of revenue they would give up their share of the company. Kevin went first with $90,000 for 35% stake, Barbara offers the same amount for 25% and Robert offers $115,000 for 35%. This infuriates Kevin who matches Roberts offer, Barbara added to her deal within six months they have the opportunity to buy her out if they choose. Kevin and Robert ultimately team up and match Barbara’s deal for $90,000 to 25%. The guys except Barbara deal.

This is an interesting deal, they accepted Barbara’s deal. Although she had some experience in the Internet field she didn’t come close to the amount of experience that both Robert and Kevin O offer. I’m sure this company will be a success it just might take a little longer.

Treasure Chest Pets is a company run by Lisa Lloyd that makes organizers that look like stuffed animals with secret spaces in them. They are sold for $19.99 and last year she had sales over $100,000. Lisa was looking for $150,000 for 25% stake in her business. She hasn’t been able to go after large retailers because she doesn’t have the capital to produce more products to meet their orders.

Barber and Daymond were the first sharks to sink their teeth into the deal. They offered $150,000 for 60% of the company. Daymond would also offer the use of his distribution and production channels essentially leaving Lisa responsible for sales and he would take care of everything else. Robert offered a $150,000 line of credit with a reasonable interest rate for no equity. This did not make Daymon happy, but Lisa accepted Barbara and Daymon’s deal.

I am surprised that Lisa did not use Roberts deal as leverage, to lower the percentage that Daymon and Barbara were looking for.

Throx was founded by Edwin Heaven, he was looking for $50,000 in exchange for 25% equity in his company. Throx sells socks in packs of threes, not three pairs, but three socks. Edwin hopes that when you lose when you’re a sock you can just use the other one and still have a pair. None of the sharks were interested in this novelty item, and were all out.

Last to take a dip in the tank was Danon Beres and his business Washed up Hollywood. Danon’s father sold belts to celebrities for several thousand dollars, Danon followed in his footsteps producing more affordable belts and belt buckles. Last year he sold 10,000 belts in 300 stores and made $50,000 profits. He was looking for $500,000 for 25% equity of the company.

Danon made a major mistake, the rules of Shark Tank indicate to you must get the minimum of what you ask for or there is no deal. This means because he was asking for $500,000 he would have to give up nearly his entire company, in order to make the Sharks evaluation work. Although the sharks believed that he had a viable business and really wanted to invest, he asked for way too much and evaluated his company to high so they were unable to invest.

Tonight’s episode Shark Tank featured four entrepreneurs pitching their business, ranging from websites to socks.
Notehall.com is a website that allows students to sell their notes to other classmates.
Treasure Chest Pets (TC Pets) a child friendly organizer in the shape of a stuffed animal.
Throx an… interesting way of dealing with your lost socks.
Washed up Hollywood celebrity base accessory company (belts)
Check back later for a full recap of tonight’s episode, in the meantime follow us on twitter @SharkTankABC