Shark Tank episode aired April 12, 2013

At the end of each Shark Tank season, I present Sharky awards to the best entrepreneurs in various categories. Tonite, I have a potential candidate for Most Intriguing Entrepreneur of the year……… Michael from Platetopper.

First, let me say that Michael has a killer product….. plastic covers that easily adhere to plates of various sizes. These covers replace Saran wrap and aluminum foil and can be re-used a number of times. The Sharks were extremely interested in investing in his company, but Michael outsmarted himself. He succeeded in getting an investment that was 70% less than what he had already been offered by the Sharks!

His strategy was baffling. He came in asking for $90K for 5% of the company (a $1.8 million valuation). Understandably, he wanted to give up as little equity as possible. He was in the driver’s seat as he had booked over $1 million in orders on QVC.

Daymond offered him $1 million for 25% of the company following Lori’s offer of $900K for 30%. This valued his company at $4 million which was more than double his initial valuation! Rather than accepting one of these great offers, he played it too cute and waited for the other Sharks to make an offer. The Sharks pressed him for his “new” valuation. At first he (correctly) refused to quote a number, but he eventually relented and said “something around $14 million”!

Whether Platetopper is worth that is beside the point. This is simply not how the investment game is played. First, the entrepreneur should always present a valuation that is a little on the high side and be willing to negotiate from that starting point. Second, investors typically want 30% equity (or more), so starting at 5% is unrealistic.

That said, if you ever get an offer based on a valuation more than double yours…..take it!

Michael ended up getting a revised offer of $90K for 8% from Lori. On second thought, maybe I should nominate Michael for the “Worst Negotiator Award” at the end of Season Four. He succeeded in turning down a $4 million offer and accepted a valuation a little over $1 million. I’m sure that didn’t teach him that in college (Princeton University!!!).

Shark Chum….Ginelle from Coolwazoo has made some very bad business decisions. For example, she pays $30 per unit and sells it for $32…..she received orders for 14,000 units as a result of an appearance on the Today Show and couldn’t fill them….. and she received 85% rejects from her supplier. When all the Sharks passed on the opportunity (see above), she started crying. I was surprised to see Lori change her mind and offer her $65K for 25% equity. Puzzling!

Bruce from No Fly Cone brought his buddy Seth MacFarlane with him to impress the Sharks. This product requires dog poop to attract flies. This repelled the Sharks and they passed on the opportunity.

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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 business startup, Daymond John, Entrepreneur, Kevin O'Leary, Lori Greiner, Mark Cuban, Robert Herjavec and tagged , , . Bookmark the permalink.

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