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 GUPPIES: Megan Reilly and Sarah Nuse
THE COMPANY: Tippi Toes
WEBSITE: www.tippitoesdance.com
SYNOPSIS: A fun energy filled dance lesson that gets children moving and keeps them in shape.
SEEKING: $30K for a 5% Stake
PRODUCT/SERVICE: 1 out of 5 kids in America is obese, and 80% of elementary schools have cut recess. Tippi Toes is a franchise focused on physical activity, healthy habits, and kids having fun. It basically keeps kids in shape while teaching them dance lessons at home.
WHAT'S THE SKINNY/HOW DOES IT MAKE MONEY?: They sold 7 franchises. It cost's $30K to get in and they target stay at home moms, pre-schools, after school activities and day cares reducing their overhead significantly. Customers pay a monthly royalty fee to the instructors. They create their own music and give them a CD called "Tippi Tunes" with a dance lesson plan, and parents get to get dance lessons for their kids on location. Last year they made $268,000 with a profit of $29,000. They will even FINANCE the money and collect the interest! And on top of that they require a minimum royalty payment of $1,000/month from the franchisee with a 10 year commitment. So far, no one has quit. They want to use the $30K investment money to produce DVD's, build a brand and have the next Barney.
STATS: If there are any guppies who's looks can be deceiving, the entrepreneurs at Tippi Toes would definitely qualify having 'tipped' their way into big financial gains, and now they decide to take a splash in the deep pocketed waters of cold cash in the tank. Money is on the menu. Who will be the first shark to flaunt their financial fangs at this freshwater feast? Daymond is the first to back out. He just doesn't think they need him. Robert thinks they are trying to grow to fast by hopping into the DVD business, therefore he is also out. Kevin, the Bull Shark who can sniff money in a hurricane, offers $50K for a 51% Stake. Barbara likes the company but isn't excited about 5%, so she offers $60K for a 20% Stake, but they gracefully turn it down. The sweet smell of money must be floating in the water because Mark then makes them a very interesting proposition. He say's he doesn't want to get into a competitive negotiation against Barbara, so he jumps out the water and snags the dish by stating that if he says YES to whatever Megan & Sarah's counter-offer is, they have to say yes IMMEDIATELY and do the deal with HIM and not allow Barbara to come back with a counter offer. Megan and Sarah agree with Mark and offer to do the deal for $100K for a 30% Stake. The Great White Shark snaps down on it like Jaws and the deal is done as these guppies are swallowed whole into a belly of finance and opportunity. Barbara just couldn't clamp down fast enough before the tasty opportunity was snatched out of her teeth. The rule of the tank is get em'-got em, and a dangling dollar on a hook won't last a second to the billion dollar appetites of these capitalistic carnivores of commerce!
CAME IN SEEKING: $30K for a 5% Stake
WALKED WITH: $100K for a 30% Stake.
GRADE: (Guppy): A+
GRADE: (Sharks): A
COMMENTARY: They actually walked out with $70K MORE than they were seeking, and still own 70% of the company. The business minds of these guppies are VICIOUS! Are these piranha? If so, they have officially earned they're SHARK TEETH. Way to go Tippy Toes!
"Success produces success, just as money produces money." - Nicolas Chamfort
CHECK OUT THE SHARK FINS SECTION FOR ARTICLES AND INTERVIEWS. ALSO CHECK OUT THE SHARK TEETH SECTION FOR HELPFUL TOOLS OF THE TRADE.
CHECK OUT THE SHARK FINS SECTION FOR ARTICLES AND INTERVIEWS. ALSO CHECK OUT THE SHARK TEETH SECTION FOR HELPFUL TOOLS OF THE TRADE.
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..........
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