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: Kim Nelson
THE COMPANY: Daisy Cakes
SYNOPSIS: A family recipe of cakes with no preservatives or artificial flavors.
SEEKING: $50K for a 25% stake
PRODUCT/SERVICE: The best cake you'll ever put in your mouth. A traditional family recipe of cakes from her aunt daisy that has the freshest, natural ingredients hand baked with southern love.
WHAT'S THE SKINNY?: She ships them nationwide, packed in dry ice. They cost $44.50 online and cost $18.00 to make. She goes to Holiday fundraiser shows to get to customers, she sold $27K in three months regional. She wants to get on one of the shopping networks and make $5,000 in 30 days. She is in the process of having her lemon curd cake in Whole Foods.
BUSINESS MODEL/HOW DOES IT MAKE MONEY?: She sells them at shows and online for $44.50.
STATS: Kevin O'Leary thinks it's the best cake he ever had, but he's thinks turning it into a business is a huge challenge. Kevin Harrington see's it as a word of mouth business, but he's looking for fast growth so he's out. Robert is out also because it's not good investment wise, but he also likes the cakes. Daymond thinks it's too small and he's out, but he still eating the cake. Barbara likes Kim very much but thinks it's too small a business to invest in. She notices that each shark loves the cakes, and have even taken more bites of it after they dropped out. She decides to make an offer. For every cake sold Kim has to mail Barbara one dollar, and by the time she sells 50,000 cakes she gets her money back, and her mother has to help her hustle the cakes at every trade show. Kim walks away with investment that appears to be more like a loan of $50K for a 0% stake on the condition that she mails Barbara $1 for every cake sold!
CAME IN SEEKING: $50K for a 25% stake
WALKED WITH: $50K and she has to payback $1 for every cake sold!
GRADE: (Guppy): A+
GRADE: (Sharks): A+
COMMENTARY: Wow! She actually got the investment she wanted on better terms than she even expected. way to go Kim, and way to go Barbara! I don't think Barbara even cares about the 20% stake as long as she gets her money back! Great job Kim! Those cakes must be AWESOME!
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...........