The following are actually REAL negotiations between entrepreneurs and investors (Guppies & Sharks). The sharks invest their own money at their discretion. The guppies get devoured into a belly of finance, or spit back into the ocean of hard knocks to fend for themselves. The entrepreneurs must convince the sharks to invest the FULL AMOUNT, or walk away with NOTHING.
THE GUPPY: Jan Augenstein
THE COMPANY: Fridge Fronts
SYNOPSIS: A magnetic skin with a decorative finish that you can apply to any appliance
SEEKING: $100K for a 30% stake
PRODUCT/SERVICE: Stainless, decorative, and other designs that can change the look of your kitchen appliances for under $100.
WHAT'S THE SKINNY?: She purchased a spot in Skymall for $18K and generated $40K in sales, she's done a few trade shows, Rachel Ray found them online and the server crashed, and the print company went bankrupt, they have a utility patent, she's the only one who can put a magnetic sticker on a fridge, she has $250K invested into the company already.
STATS: A makeover for a fridge. Very clever. Kevin O'Leary thinks that it a useful product, but it's just not a company and he's out. Robert thinks it's just to small and he's out. Daymond doesn't seem to have a clear direction on where he can take the business and he's out also. Barbara wants Jan to limit the product to 3 best selling designs and say's she'll give Jan half the money if she can convince another shark to give her the other half. Jan wants to focus on new designs but Kevin Harrington is interested in her selling the product that she already has as opposed to working on new product. He thinks her Skymall sales venture was a big success. Kevin and Barbara offer $100K for a 50% stake. Jan agrees and does the deal walking out with the investment.
CAME IN SEEKING: $100K for a 30% stake
WALKED WITH: $100K for a 50% stake
GRADE: (Guppy): A-
GRADE: (Sharks): A
COMMENTARY: She managed to secure the investment she needed and keep their ownership within 20% of what she was willing to give them. Nice. I think I would have asked them to bring their ownership down to 40% just to see if they'd go for it and carefully watch their body language, then do it for 50% if, and only if they would have began to hesitate and retract their offer. Walking on the edge in the world of negotiations is an art and a science. What do you think?
WHAT DO YOU THINK? COULD SHE HAVE GOTTEN THE SAME CAPITAL (OR HIGHER) WITH A LOWER STAKE? WHERE THE SHARKS FAIR IN THEIR NEGOTIATIONS? DID BOTH PARTIES COME OUT ON TOP? POST YOUR COMMENTS AND TEST YOUR NOODLE AT THINKING LIKE A BILLIONAIRE...........