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: Stuart and David Pikoff
THE COMPANY: Games2U
SYNOPSIS: The first and only nationally branded mobile entertainment company of it's kind.
SEEKING: $500K for a 10% stake
PRODUCT/SERVICE: A franchise of specialized vehicles equipped with 4D movie theaters, mobile video game theaters and other fun games.
WHAT'S THE SKINNY?: They have over 140 franchised territories sold in 28 states, and they do over 2,000 parties and events each and every month.
BUSINESS MODEL/HOW DOES IT MAKE MONEY?: A home birthday party is typically $300 to $400. Corporate events and fundraiser's are a few thousand dollars. Last year they did $3 1/2 Million in gross sales on the corporate level. This year they are up 65%. They have a lot of other unique products. Franchisee's invest and get a protected territory, a specialized vehicle, and a vast array of equipment. They pay approximately $150K to buy into the franchise, they pay a 6% royalty with a $1,000 minimum per month, and last year they netted $125K at sales of just over $3 Million. They are the 21st fastest growing franchise in the country.
STATS: Daymond can't get over the numbers, and the fact that he only gets 10% after laying out half a million and he's out because of that. Barbara is out due to the fact they have to constantly create new product which is expensive. Jeff thinks shelling out $400 for a kids birthday party isn't likely to happen much for this economy so he's out. Robert has an issue with the fact that they can't continue to make money unless they develop new product. Kevin decides to make an offer of $500K for 51% because he needs control. They don't want to give up control of the company and they decide to huddle out in the hallway for a minute. They come back and counter with $500K for a 25% stake. The y just don't want to give up a controlling position of the company. Kevin say's he has to go with his gut, and the only thing that speaks to him is MONEY. They won't budge. Stuart and David walk away with no investment.
CAME IN SEEKING: $500K for a 10% stake
WALKED WITH: No investment, but maintained control of their own company.
GRADE: (Guppy): C
GRADE: (Sharks): Not Applicable
COMMENTARY: They appear to have a successful franchise but the profits seemed a little light for the sharks maybe due to the fact that they where just making back what they invested into the company to get it started. I think they will skyrocket due to the publicity of Shark Tank now that they have a little more exposure. Good luck! I think they'l make it.
WHAT DO YOU THINK? COULD THEY 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...........