Pitch 1: O’Dang Hummus
Ask: $50K for 10% ($500K Valuation)
Cathy’s Thoughts: I really love up-tempo, high-energy pitches. Full blown feeding frenzy on this one, with four sharks presumably in (Mark’s offer never got thrown). The refrigerated section of the grocery store is America’s top retail battleground. It’s the most competitive, cutthroat landscape in the fast paced grocery industry, and there’s very, very little shelf space for start-ups. But Kevin O’Leary, who owns astronomical amounts of clout due to owning some of the country’s largest seafood debt, showing interest makes this interesting. I agreed with Kevin in you have to choose either the three Hummus SKUs or the two Salad Dressing SKUs. Great pitch, modest ask.
Cathy is: I would have made an interesting offer to Kevin: bump the offer to $75K for 20% that we chop, but I’ll assume the production risk. He would have had no reason to cut me in otherwise. I think Kevin would have taken it.
Result: Lori and Robert chopped 25% for 50K. Mark Cuban never got to throw out $100K for 25%, though if he had genuinely been enthusiastic about investing, he would have put his offer out and not paused long enough for a deal to get done.
Pitch 2: Splikity, a password solutions app.
Ask: $200K for 10%.
Cathy’s thoughts: like Mark Cuban, I completely lost interest when I found out these guys had no background in technology or software. I don’t feel Mark properly articulated why his would be a typical reaction: because you want the people who have the ultimate, final say in a company’s direction and decisions, including those related to security standards, to be tech guys. You don’t want it to be people who might not spend their working hours pouring through tech journals and trades to make sure all their future decisions are informed. It’s not that these guys couldn’t be trusted to make proper decisions. It’s that there’s no assurance of it. 10% doesn’t give you enough board seats or any protection from the decisions of the founders. If their decisions aren’t based on the market necessity but rather profit necessity, you have very little means to right the ship. I wouldn’t have bothered throwing out an offer for 50% either.
Cathy is: Out. In addition to all the stuff I just mentioned, apps can be tough to monetize (and always cost a multiple of what you think they will) and there’s not a ton of proprietary technology behind it.
Result: Kevin offered $200K in venture debt, meaning they would have to pay $600K. Kevin would also endorse the product under one of his brand names for 5% equity. Terrible offer that I would have been shaking my head at. No deal.
Pitch 3: Mikki Bey Eyelash Extensions
Ask: $300K for 20% ($1,500,000 Valuation)
Cathy’s Thoughts: I felt terrible for Mikki because I felt she had no chance of avoiding rejection. She has a viable business for herself that was among the least investable they’ve ever had on the show. Her numbers and the business as it exists today leave no room for anyone else. There was barely enough room for her. I feel her presence on the show was a casting failure since there was no way you could spin the possibility of landing a $300,000 investment based on her revenue and her business plans. It almost felt like she made it in front of the Sharks for the sake of sport, and I don’t like that.
Cathy is: Out. I would have also advised Nikki to not put any money towards patenting her process. Patenting a cosmetic process is a sucker’s game that offers very limited protection for far too much money.
Result: No deal, probably the least viable idea ever put in front of the Sharks.
Pitch 4: Loliware, edible cups.
Ask: $150K for 10%, revised to $600K for 25% to complete a round that began before the show taped.
Cathy’s thoughts: Another feeding frenzy, as these girls came out with a new concept. I have to admit, I would have liked to have tried the cup with just water to see how much of the flavor bleeds into the beverage being drank. Does the cup require recipes tailored to it? That wasn’t ever discussed because the offers suddenly started flying. Offers that I would never have been cut into.
Cathy is: Out, assuming nobody offered to cut me in on their deal (they wouldn’t have). I would have considered upsetting the apple cart by offering to back their current round of $600K that was 30% complete during the taping with an operating line of credit at a standard interest rate, but such a thing would be uncharacteristically (ha) vindictive of me and I would never think of such a thing.
Result: Mark and Barbara chopped the 25% for $600K.