This episode featured businesses started while the contestants were still in college. This was the strongest group of future entrepreneurs EVER to appear on Shark Tank!!!!! I loved their confidence, vision, and knowledge. They were all very impressive and gave great presentations.
Since it’s almost NCAA March Madness time, I have assigned the four young companies to the colleges their founders attended, and am staging a simulated “Final Four” to determine the winner of this week’s Sharky Award for entrepreneurial excellence.
Based on “Last 12 months Sales”, I am slotting the four companies into two divisions. They are:
The Big Apple Division
Columbia University (Anna and Andrea from LuminAID)
New York University (Ryan and Nayeem from Keen Home)
LuminAID has invented Solar-Powered Inflatable Lights that are sold to campers/hikers and to first responders at various disasters. Their sales were $1 million during the past 12 months. They received offers from all five Sharks and ended up accepting Mark Cuban’s offer of $200K for 15% equity. As part of his offer, Mark has the option to be the lead investor in their next round of financing(Note: It is very important for an entrepreneur seeking third-party funding to have a “big name” investor lead the investment round. This attracts other investors who normally might not invest).
Keen Home makes air flow controllers that are controlled by smart phones that help reduce heating and cooling bills in any house or hotel. They had pre-sold 35,000 units to Lowes, and had a post-money valuation of over $5 million from their last round of financing. (They had recently raised $1.5 million in their “seed round” prior to their appearance on Shark Tank).
Columbia vs. NYU is a great match-up of very skilled entrepreneurs. They both exuded confidence and had all the answers to the Sharks’ questions.
From a Product standpoint, I believe Columbia has the edge and are further along as evidenced by their $1 million in sales in the last 12 months. Anna and Andrea were knowledgeable and passionate about their product. They had built the prototype themselves and used their product themselves when they were traveling to an area without electricity.
NYU had an edge in two areas. I believe they had a larger potential market and they were further along in their funding efforts. Ryan and Nayeem were two polished MBA grads who seemed a little stronger and better connected on the Finance side of the business. They calculated a two-year ROI for customers who buy their products.
This game is almost too close to call, but I’ll go out on a limb and pick the Columbia Lions (LuminAid) because of their passion for their product and their market. I think with Mark Cuban, they will succeed.
Note: It’s good to see there are so many new sources of funding for young entrepreneurs including crowdfunding (Kickstarter, Indiegogo, etc.) and college Business Plan contests. Of course most entrepreneurs still need to self fund to launch their new businesses and show other potential investors that they have skin in the game.
The Bootstrapping Division
Drexel University (Christopher from Scholly)
Virginia Tech (Jack and Alley from TaaLuma)
Scholly had developed a mobile app that searches a database for college scholarship opportunities based on a prospective student’s characteristics. They’ve had 92,000 downloads at 99 cents each. Christopher created this database when he, himself, was looking for a college scholarship. He has two other partners who provide technical expertise.
TaaLuma makes backpacks unique to various countries around the world. They use 10% of their gross sales to provide micro loans to entrepreneurs in the “country of origin”. They also use adults with disabilities in the U.S. to manufacture the bags. So far they’ve generated $60K in Sales. The Sharks thought they were too early for an investment and they still had a lot to learn about their business.
I’ll pick Drexel (Scholly)to win this division. After Christopher accepted an offer from Lori and Daymond ($20K each for 7.5% each) and after he had left the stage, the Sharks had a “discussion” about whether the investment was driven by charity or potential financial return. The producers of Shark Tank had hyped the hell out of the “three Sharks leaving the set” in their pre-show promotion prior to the show, but it was much ado about nothing…..strictly a made for TV moment. The fact is, the last contestant had left, the show was over, and the Sharks were leaving anyway.
I understand why Lori and Daymond made a pre-emptive offer to Scholly without having a complete understanding of how his business works. Christopher has accomplished so much in a short amount of time and has a great future as an entrepreneur. Why not take a shot for $20K? Besides, neither Lori nor Daymond would have won this deal once the other three “technology oriented Sharks” got involved in the bidding.
The message from this episode of Shark Tank for all future students and entrepreneurs……there is money out there that can help you achieve your dreams. You just have to know where to find it and then work hard to get it!