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.
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| Wurkin Stiffs/Power Stays |
THE SHARKS: Barbare Corcoran, Daymond John, Kevin O'Leary, Robert Herjavec, Mark Cuban
THE GUPPY: Jonathan Boos
THE COMPANY: Wurkin Stiffs
WEBSITE: www.workinstiffs.com
SYNOPSIS: Power Stays, The worlds only magnetic collar, stays clips onto the underside of your collar with a hidden magnet underneath that transforms your shirt into an hidden button down collar.
SEEKING: $85K for a 10% stake
PRODUCT/SERVICE: Wurkin Stiffs is a brand with a neat little product known as Power Stays. You can take a shirt and turn it into an instant button down collar with a super strong hidden magnet. The clip and the magnet remains hidden while the shirt collar remains discreetly buttoned down.
WHAT'S THE SKINNY?: Power Stays launched in 24 stores. Within 3 months it was in 77 stores, sold over 18,000 units, then made over $16,000 retail and is currently in all 115 NORDSTROM stores. Sales in ALL the products are at 1/2 Million dollars and expecting to do $1.8 Million next year.
BUSINESS MODEL/HOW DOES IT MAKE MONEY?: Jonathan wants to take the $85K investment money and take his company to the next level. He also has more products on the drawing board and still in development.
STATS: Ahhhhhhh,...... the smell of fresh money in an ocean of investment with a product or service that is really needed. Entrepreneurship is the real lifeblood of the economy. And what could be tastier to a shark investor than an entrepreneur who has found a way to meet a huge demand. Although Mark likes Jonathan's passion and knowledge, he decides to back out early because he say's he's just not the guy with the connections that can add value to the company. Barbara backs out shortly after. Daymond remains quiet as Kevin decides to take a bite. Kevin offers Jonathan $100K for 30% equity with a 14% ROYALTY (for HIM). Jonathan see's it as a loan, but Keven is sharp witted and chomps back down on the guppy with a verbal commitment to pump more cash into the company when needed. Jonathan is savvy enough to realize that he needs more than just money. He needs someone that can help him. A shark with experience. There is only one shark in these waters who can give him the connections and power he seeks, and that's Daymond, but the Shortfin Mako Shark has remained very quiet thus far. Jonathan finally reaches out to Daymond but can't keep his MOUTH closed long enough to let Daymond take a bite and make an offer. Daymond doesn't like big mouth guppies arguing with him so he backs out. Jonathan botches the offer, and the guppy apologizes, hoping for another chance to secure the investment. Daymond actually LIKES the product, but he is already pissed at the guppy with the mouth bigger than his bite. The one shark Jonathan wanted a deal with most is OUT. Back and fourth they go as the waters of finance in the tank are shaken up. Kevin decides to dangle his offer back at Jonathan, then Robert chomps down with an offer of $100K for a 30% equity stake with NO royalty. Jonathan counters and asks Robert to raise it to $200K for 30%, but Kevin bites back and drops his equity down and offers $100K for 20% but the 14% royalty must remain. Robert then makes a final offer of $100K for 25% stake. Then Barbara suddenly decides to shake the financial waters up again and offer $100K for 20% on the condition that Daymond forgives Jonathan and comes back in on the deal, but Daymond say's 20% is NOT enough. He then makes a hard offer and say's he can't take less than 40% equity due to his knowledge. Then Kevin decides to drop his equity down to 15% but the 14% royalty must remain. Jonathan makes 1 last effort to get Daymond and Barbara to nibble at $100K for a 30% stake, but the Shortfin Mako won't bite. Decisions decisions. Money, money, money. After thinking it over, Jonathan finally decides to do the deal with Daymond and Barbara, securing the needed experience he sought, along with the needed investment.
CAME IN SEEKING: $85K for a 10% stake
WALKED WITH: $100K for a 40% stake
GRADE: (Guppy): B-
GRADE: (Sharks): A+
COMMENTARY: Although in my opinion I think Jonathan made out pretty good because he got more than he came for, the question remains, ..... at what cost? Numbers don't lie. He came seeking $85K for 10%, and walked out with $15,000 more than what he asked for, but at 30% more than he wanted to give. Although this isn't bad at all, I think if he would have put a LID ON THE GILL FLAPPERS and kept his mouth closed, he could have given up less equity. I'm pretty sure him being a smart guy, he had bargaining leverage already calculated into the equation, but I believe he could have gotten $100K for a 35% Stake.
"Money often costs too much." - Ralph Waldo Emerson
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 HE 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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