Shark Tank episode aired September 28, 2012

Tonite’s episode had some very strong entrepreneurs…..but they each had a wart or two.

Two got deals got done and two didn’t. I am awarding one Sharky award tonite….to one who didn’t get a deal. Here’s why….

Platinum Sharky……Dan and Liz from Liz Lovely Cookies

This husband and wife team demonstrated everything you would want to see in a entrepreneurial company.  They had a great product in a growing market (gluten free cookies), they had generated over $1 million in Sales last year, they were passionate about their business, and have overcome adversity numerous times to get where they are today. In fact, Hurricane Irene destroyed their store three days before they opened it.

A couple of the Sharks didn’t like the way the cookies tasted. News Flash…..Gluten Free anything doesn’t taste as good as the real thing. Mr. Wonderful added, “I just hate your product”.

So why didn’t they get a deal? Mark Cuban understands the benefits of gluten free (some of his Dallas Mav players are now gluten free). He was interested but didn’t like the company valuation of $2 million. He asked Dan and Liz to make him an offer and he would respond to them immediately.

Dan made him an  offer of $200K for 20%  (a $1 million valuation) but Mark responded with, “No thank you”.

The lesson to be learned is that investors typically want a minimum of 30% to 40% equity in the company’s they invest in.  In fact, Mark told the other Sharks he was looking for 33% after the entrepreneurs left.

Shark Chum……Lee from Rockbands made a deal with Mark and Daymond for 40% of the company. The offer was made despite the fact that Lee had a very poor knowledge of the financials of his company (wasn’t sure if a royalty deal he had negotiated was 40% of Gross or Net sales).  To me, the highlight of this segment was when Robert made the statement that “Entrepreneurs make their own luck” in response to Barbara’s statement that “he’s always had bad luck”.

Tereson from Fuzzibunz had invented a reuseable diaper (back to the future?). She off-shored the manufacturing to China and her U.S. patented idea was stolen. The Sharks backed away from this deal when they realized many long distance lawsuits were inevitable. This is another example of the downside of off-shoring the manufacturing of a new product.

Mike and Matt got  deal for 30% of PostureNOW PLUS a $5 dollar a unit royalty (about 15%) until Mark Cuban got his $100K investment back. Mike talked so much, and listened so little, I’m surprised they got a single offer. The offer they did get from Mark Cuban was pretty bad….I think they got what they deserved.

 

 

 

     

 

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About Shark Tank Ratings

Author of "Unlocking Your Entrpreneurial Potential: Marketing, Money, and Management Strategies for the Self-Funded Entrepreneur"
This entry was posted in barbara corcoran, Daymond John, Entrepreneur, Kevin O'Leary, Mark Cuban, patents, Robert Herjavec, Shark Tank, start-up and tagged , , , , , , , , , , . Bookmark the permalink.

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