Victoria and Tim from Innovation Pet make toys for pets…… Dog Houses, Kitty Connection (think of a jungle gym for cats), and Chicken Coups make up the majority of their sales. They have $2.5 million in revenues with margins of 28%.
They ended up making a deal with Daymond (an animal lover himself) for $250K for 12.5% equity and 25% of their online sales. It was the 25% that concerned me. With relatively thin margins, this seemed like too good of a deal for Daymond. Granted, they don’t have many online sales now, so it must have seemed like a good deal to Victoria and Tim at the time, but I hope they take a second look at this percentage before signing on the dotted line.
Henry from Mob Craft gave an excellent presentation. He was poised, passionate, and knowledgeable. Mob Craft combines Crowdsourcing technology with Craft Beer creation. Essentially, it lets customers create their own Craft Beers, and then allows everyone to vote on which one they like the best. Henry handed out six samples to each Shark (I think one or two would have fine). I swear the Sharks seemed a little bit drunk after trying all six!
Four of the Sharks were out immediately (nap time?), and Mr. Wonderful made a low ball offer that Henry declined. Being very quality conscious, Henry told Mr. W that he would not outsource the manufacturing of his beer just to reduce costs and increase profits. Good move, Henry!
Jeremiah from Beloved Shirts had only been in business for 2 1/2 years and he already had sales of $2.3 million. Jeremiah gave a good presentation. The only red flag was the number of SKU’s (Stock Keeping Units) he had……22,000! Shark Lori suggested he cut down on his product line of crazy shirts to the Top 50 styles and make them to stock vs. making them to order, thereby cutting down his lead tome (about 30 days) and reducing his cost of goods sold.
Jeremiah and Daymond couldn’t come to terms so there was no deal here.
Matt and Mike from illumibowl made a smart toilet bowl night-light. They had sold 6500 units on Kickstarter but hadn’t officially launched their company. Daymond didn’t think they needed an investment yet….it was too early, and they could get to the next level themselves. Surprisingly, Mr. Wonderful made a deal with Matt and Mike for $100K for 25% of their company. Go figure.
OVERALL RATING OF THIS EPISODE…….B