Four totally different entrepreneurs appeared on tonite’s Shark Tank episode. One started an entertainment company, one had a finance company, another had a home repair product, and the other had a marriage conflict resolution product.
I think two stood out, and they will receive tonite’s Sharky Awards.
Platinum Sharky Award……….Melissa from TenThirtyOne Productions
As the name implies (think 10/31), this company was the perfect contestant for the pre-Halloween show. Melissa was a former manager for Clear Channel-Los Angeles and knew how to promote her haunted hayride enterprise. So much so, that she sold out her LA haunted hayride every day for 17 straight days in October. This resulted in her grossing $1.8 million and clearing $600K last year.
With plans to double her maximum capacity and start a NYC haunted hayride , she ended up getting $2 million for 20% from Mark Cuban. Although this was a very rich valuation ($10 million), Mark stated that he believes this kind of family entertainment has a great future, so he followed his gut and made the deal.
Gold Sharky Award……….Spencer and Eric from FiberFix
These two gave an “infomercial ready” presentation. They had the Sharks fighting for the deal, but they undervalued their company and the Sharks knew it.
Spencer and Eric almost blew it by coming back with a counter offer and asking Lori Greiner for a $2 million Line of Credit in addition to $120K for 12% equity. It lead to a good discussion about the difference between a Line of Credit (LOC) vs. Financing Customer Orders (Purchase Orders). Lines of Credit can be used for any expense within the enterprise, whereas financing a P.O. is essentially a loan for approximately 80% or more of the value of the Purchase Order. It is used to pay the manufacturing and shipping cost for that order.
Lori accepted the counter offer once it was understood that she would not provide the LOC, but would finance individual P.O.’s.
Shark Chum Awards……Amanda and Jason from Elephant Chat had created a product designed to help husbands and wives communicate their feelings. The product was a stuffed elephant (“the elephant in the room”) that could be left at the scene of the crime (ex-when hubby leaves the toilet seat up). This would facilitate meaningful dialog according to the couple. Enough said.
Jason and Val from Total Merchant Resources in NJ were self-described mini-Sharks. They made loans to small businesses and took over their credit card processing. This was right up Mr. Wonderful’s alley. Mr. W’s offer required them to give up 50% of their business……an offer they couldn’t refuse.