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: Julie Goldman
THE COMPANY: Original Runner Company
SYNOPSIS: The worlds first, non-slip, fabric isle runners for weddings and special events.
SEEKING: $250K for a 15% equity stake
PRODUCT/SERVICE: A 50 ft, nonslip, fabric wedding isle runner that is safe and beautiful with a home monogramming kit.
WHAT'S THE SKINNY?: Last years sales where $550K. It cost $25 to make and sells to the retail stores for $37.50. They make the only nonslip isle runners in the world. she say's her business is worth more than $1.8 Million. She say's evaluation can be based on projected income, or current revenue etc, and based on current revenue if she makes $650K this year using a 3 to 5 ratio, it falls well into $1.8 Million. her profit margin is 200%. She makes about $500 on the custom runners. She dominates the custom isle runner market, and wants to go into the less expensive economical market of cheaper weddings and dominate it also.
STATS: Barbara doesn't agree with her strategy and she's out. Mark says she's missing the obvious and her retailers are never going to sell her product as successful as she will and he's out. Robert just can't see the business scaling into a large business and he's out. Daymond is also out. 4 sharks out. Kevin O'Leary thinks she needs him and offers $250K for 51% because he wants control. He thinks she's gotten lost and need's his guidance. He say's her 49% will make her rich. She disagree's with him being in control but Kevin O'Leary knows how to make money. This guppy is very confident, she will not give up control. She says she'll never give up 51% to someone who doesn't understand the wedding industry. Daymond advises her to counter and she counters's back with a 15% equity stake for Kevin. Kevin tells her to turn around and get out of the tank. Then her throws her friend out afterward. Julie walks out with no investment.
CAME IN SEEKING: $250K for a 15% equity stake
WALKED WITH: Nothing.
GRADE: (Guppy): C
GRADE: (Sharks): Not Applicable
COMMENTARY: She said there is NO WAY she would give up 51% and her business is gonna make $650K this year. Kevin wanted her to stay out of the toilet bowl weddings and walk the path of the high profit margin. She is 100% confident her business is worth $1.8 Million. She said his offer was ridiculous. I wonder how much of that $650K is profit? Maybe she is right. Good luck Julie.
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...........