Over the years we’ve seen some crazy negotiations in the Shark Tank, but this episode featured one of the most intense we’ve ever seen. From customizable lunch boxes to customizable chocolate, there were certainly some interesting businesses in the Shark Tank. Missed all of the action in the tank? Here’s what happened:
First into the Shark Tank were Cyndi and Paul Pedrazzi, representing their company, Yubo Lunchbox. The Pedrazzis asked the Sharks for a $150,000 investment in exchange for 15% equity in their customizable lunchbox company. The pair came up with Yubo after growing frustrated with existing lunchboxes on the market. Yubo is easy to clean with its optional inner containers, and kids can design (and re-design) the outside of their Yubo however they like. The basic Yubo sells for $21.95 and the deluxe model sells for $30-40, depending on customization. After four years in business, the Pedrazzis are projecting $200-$250,000 in sales this year, and they also have design and utility patents on the product. The Sharks are impressed with the sleek design, which the Pedrazzis worked with an industrial designer to build. In exchange, the industrial designer owns 20% of the company, and he gets a 5%-1% sliding scale royalty (dependent on net sales) in perpetuity. With the mention of perpetuity, Kevin’s ready to pounce. He’s first to make an offer of $150,000 for 10% equity, and he wants the same royalty deal as the industrial designer. Robert’s offer is next; he’s in with a straightforward offer of $150,000 for 30% equity. Kevin then amends his offer to $150,000 for 20% equity, and he’ll drop his equity to 12.5% if he’s paid back in 18 months. Lori ups the ante by putting in her own offer of $150,000 for 15%, which will drop to 12.5% if she’s paid back in 15 months. Kevin then amends his offer again, this time to $150,000 for 20%, which will drop to 10% if paid back in 18 months. Robert joins Kevin’s offer and the Pedrazzis are ready to make a deal with Robert and Kevin. Whew!
During Season Four, Drop Stop entered the tank looking for a deal on their car padding system that prevents drivers from dropping items between the seat and the console. After securing a deal with Lori, Drop Stop has hit $5 million in sales, and is projecting $15 million in the next 12 months, including a $2 million with their first major retailer: Walmart. Congrats!
With a modern twist on a familiar women’s accessory, Kelley Coughlan and Jenn Deese entered the tank seeking a $55,000 investment in exchange for 12% equity in their company, pursecase. As its name indicates, pursecase is a small simple clutch that allows women to carry their phone, cash, cards and ID in a chic small case. While Robert is skeptical, having seen similar products on a recent trip to Europe, the women reveal that they already hit $30,000 in pre-sale orders in the first three months, and that they’re projecting $240,000 in sales in their first calendar year. The product costs $4.42 to make, which they wholesale at $15 and retail at $38. Lori mentions that she already sells a nearly identical product on QVC, but it isn’t clear what she wants to do. While Lori thinks, Kevin throws out an offer of $55,000 for a $1/unit royalty until his investment is recouped, and $0.75/unit after that. But Lori isn’t out quite yet—she says she immediately knew this product was “a superhero” and that she’s in at $55,000 for 15%. Without a second thought, Kelley and Jenn accept Lori’s offer!
Next into the Shark Tank is Joey Dauenhauer, looking for a $500,000 investment in exchange for 20% equity in his custom chocolate creations company, Chocomize. Chocomize allows users to create their own chocolate bars by selecting flavors, toppings, and even edible messaging or logos. With a finance background, Joey has no difficulty answering the tough financial questions: Chocomize did $440,000 in sales in 2012, and $500,000 a year before. He attributes the 2012 sales dip to money that was spent moving manufacturing to a bigger facility. The bars sell for $6-$6.50 apiece, and cost Chocomize about $2 to make. While it’s not clear if he was joking or not, Kevin offers Joey $500,000 to start a new custom chocolate company from scratch, and Kevin offers him 25% equity to do it. Joey’s not interested, which prompts the ever-popular one-liner from Kevin: “I’m going online to order my first ‘You’re Dead to Me’ bar and it’s going to you!” No deal for Chocomize.