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: Rebecca Rescate
THE COMPANY: CitiKitty
SYNOPSIS: A way to toilet train your cat
SEEKING: $100K for a 15% stake
PRODUCT/SERVICE: A liter box that conveniently sits hidden away under a toilet seat that will gradually toilet train your cat.
WHAT'S THE SKINNY?: They retail for $29.99, each cost per unit is $4.76, she manufactures in quantities of 10,000. She's sold 40,000 of them off her website alone. This year she's doing $350K in sales, last year she did $225K. She's sold $1.4 Million in cat toilet training kits and never advertised. She's been on Good Morning America, CNN and The Wall Street Journal. She initially invested $20K, but she's constantly putting money back in the company while remaining profitable. She wants to use the money to get sales reps for the product, and also do marketing.
STATS: Catfish in the sharktank? Here kitty-kitty, ... well, not quite but this guppy is equipped with imagination and was bold enough to act on it. Robert doesn't think it's a business he has any interest in, or that he can add value to, plus he doesn't own a cat, so he's out. Kevin O'Leary just hates cats and he's out. Kevin Harrington looks at two things: A product that solves a problem, and a mass market product. He knows every pet store in America will want this product if he put's it on TV, so he offers 100K for a 40% equity stake. Rebecca wants to hear the other offers before countering. Daymond says that Kevin's offer is a better offer with a better strategic partner so he drops out. Barbara decides to take a bite of this guppy and suggest Rebecca partners with her and her partner in New York who own's As Seen On TV and offers her $100K for a 15% equity stake, but, only if her partner back in New York likes the product. So Rebecca has a risk deal on the table. Very interesting options. $100K for a 40% stake with the King of Infomercials vs. $100K for a 15% stake with Barbara and her partner Mr. As Seen On TV, but only on the contingency that he likes the product. Kevin Harrington is ready to do the deal. Rebecca says she can't do it for 40% at $100K because she easily made $100K last year alone, and the product wasn't even in retail. She counters with 20% for $100K. Kevin counters with $100K at 25% and says that's it. Barabara casually reminds Barbara about taking precaution before jumping to bed with a guy in a business deal. Rebecca counters back to Kevin that she would do 20% at $100K. Barbara then drops the contingency just to knock Kevin out the waters. Rebecca suggests that Kevin and Barbara work together but Kevin wants the deal all to himself. Barabara then reminds Rebecca that the risk of her partner getting in on the deal is now in her hands and there is no longer a contingency. Kevin Harrington says it's time to make a decision. Rebecca finally accepts Kevin's offer and walks out of the tank with the investment.
CAME IN SEEKING: $100K for a 15% stake
WALKED WITH: $100K for a 20% stake
GRADE: (Guppy): A
GRADE: (Sharks): B
COMMENTARY: Rebecca got the investment she sought by being a shrewd negotiator. She managed to bring Kevin Harrington's 40% down to 20% with sharp counteroffer's and the combination of the possibility of accepting Barbara's offer. She even knew better than walking out in the hallway and giving the sharks time to re-think and maneuver LOL! Good work Rebecca! And Good luck.
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...........