Fourth Guest: Joe Moore, First Defense Nasal Screens
- Kevin offered $500,000 but wanted a 15% royalty on every unit sold until he recouped his $500,000, and 20% equity. He tried to push the deal saying that the other sharks were out.
- Mark said “not necessarily true” and offered to work with Kevin. OK
- Daymond offered $800,000 for 30% and a 10% royalty
- Kevin changed his offer to $1,000,000 for the whole company right now (which was the lowest offer of the day).
- Daymond countered with $1,000,000 for 30% and a 10% royalty until he recouped his investment.
- Robert offered $2,000,000 for the whole business, with Joe keeping a 10% royalty. Joe said he was interested, but not for $2,000,000. Robert countered with $4,000,000, the largest sum offered in Shark Tank history!
- Joe, God Bless Him, had the courage to counter with $5,000,000 and 15%. Robert said no, and was out. That left Mark, Daymond, and Kevin.
- Presentation: Joe was rough, but very passionate and very strong. Come to find out, he was a cancer survivor and a Marine Corps veteran – and it showed.
- Business Strengths: The passion of the owner, and the patents and orders. Intellectual property rights and market traction are key to attracting investors.
- Business Weaknesses:. The product probably won’t appeal to people focused on their self-image.
- The Deal: the original offer was $500,000 for 10% of the company. Kevin wanted $500,000 for 15% of revenues, then 20% of the company. Robert
- Sharks: The offers and counteroffers were outstanding! Kevin was his usual “sharky” self, insulting Barbara, Robert, and Daymond by saying the Mark and he were the only ones who had sold a company for a Billion, inferring that they were by definition much better partner candidates.
- Fullfill those orders and make a run at the other mid-eastern countries.
- Find a way to make a similar product that is inserted into the nose (at least a little bit) so it appeals to those who are concerned with their looks.
- Investors love a company that has a lot of pending orders, patents, and has already made a significant investment.
- Be prepared – having the $8 million contract in his hands for review was a very smart move.
- Be very careful of royalty agreements – they suck up cash needed for growth, artificially increase the price of the product, and can take up an enormous part of the profits. (Contact us for a more detailed explanation if you are considering a royalty agreement as a part of your capital strategy.)
- You can learn more about First Defense Medical Systems at www.filteryourlife.com and 877.MyAir.09. You can buy them online for as low as $10.
(If you are interested in raising capital for your business, visit us at www.AngelNetwork.com)