Second Guests:  Ben and Melissa Fossey, Caddyswag

Ben and Melissa Fossey have designed the perfect product for the causal golfer: the Par Six is a cooler that fits in a golf bag and holds six cans of your favorite beverage and keeps them cold with a flexible gel pak.

 

They were asking for $60,000 for 20% of the company, a pre-money valuation of $240,000. 

 

They can sell the Caddyswag coolers for $19.95 for two. Some golf courses won’t allow them, but it is OK with many. They are selling $15,000 a year, and haven’t promoted the product at all.

 

Daymond was out immediately with no explanation. Robert only plays on courses that won’t allow it, and said that  it was just a cooler bag, and that he couldn’t see the benefit.

 

Kevin H suggested that the Golf Channel was the natural outlet, but he didn’t see it working well there, and he was out. So was Robert.

 

Barbara thought it was a small business, and would take too long to get an ROI. Kevin O agreed. Everyone was out.

 

Ben was miffed and asked for his samples back!

 

Our Analysis:

• Presentation: The presentation was smooth and polished. They did a nice job. .
• Business Strengths: Golfers spend a lot of money, and they like to drink.
• Business Weaknesses:. There is a lot of competition, and the value proposition wasn’t that strong. It is a novelty product.
• The Deal: They asked for $60,000 for 20% and got no offers or counter-offers.
• Sharks: They were courteous, but quick to point out that they didn’t see a big business here.

Next Step Suggestions:

• Grow organically. Take out small ads in local / regional media and see how profitable you can make.
• Develop additional products either in the cooler industry or the gold industry.  
• Be careful of the links police!

Lessons:

• One product, especially one that can be so easily copied, will not make a strong company.

Follow-up:

• We found them at www.Caddyswag.com. They sell extra gel packs and complementary products such as T-Shirts and ball caps too.

(If you are interested in raising capital for your business, visit us at www.AngelNetwork.com) 

First Guest: Diedra Haysel, Hot Mama Gowns

Diedra has a way to make pregnant women feel beautiful. She felt very uncomfortable when she had her child a few years ago (humiliated actually), and decided to design a gown that would make women in hospital feel much better about themselves.

 

She is seeking $30,000 for a 20% stake in her company, a pre-money valuation of $120,000.

 

Maternity is a $12.5 billion market, but she has only sold $12,900 worth of products in the last two years – ouch!

 

She is a pharmaceutical sales rep in her day job. She thinks this is a no-brainer; she has done no marketing and has distributors calling her. She believes that with just a little bit of marketing, the business will take off. And she’s working “from 10:00 PM to 2:00 AM” every day in the business.

 

Daymond sees a challenge in educating the market about the new product. He was right in noting that $30,000 wouldn’t even pay her, much less be enough to fund a promotional program of any kind. She thinks all she needs is more inventory, and has no idea how to grow the business.

 

I loved Kevin O’s comment: “Between an idea and business is one H*&^ of a long road!”, and he was out.

 

Daymond asked if she would license it out, and commented “It’s what you think you already know that will prevent you from learning”. Well said. He was out.

 

Robert noted that she was probably a great sales rep, but her inability to take no for an answer and her overconfidence was disturbing as a business owner, and he was out.

 

Kevin didn’t like the fact that this was always going to be a part-time job for her, and he was out.

 

Barbara was her last chance, and she was very worried with Diedra as a partner. Diedra was shocked and emotional. The business was her baby, and she cried. Barbara asked for many things: restricting the sizes, keeping her day job, etc., and made an offer of $30,000 for 40%. Diedra turned her down.

 

Our Analysis:

• Presentation: She was defensive and emotional, which is both good and bad. It demonstrates her passion for the business, but brings into question her ability to be cool and calm under pressure. And she came across as being egotistical, at one point even saying “I know all the answers!”
• Business Strengths: She is committed and passionate, and is playing in a growth industry. Her product would be a great one for baby showers for the middle and upper classes.
• Business Weaknesses:. She seemed a little overzealous, with a great deal emotionally invested in the business. There have been very limited sales so far, so we really don’t know if marketing programs will work as we want them to. And she clearly doesn’t understand sales and marketing expenses.
• The Deal: She asked for $30,000 for 20%. Barbara made a counter-offer of 40% with other conditions, and Diedra turned her down. Wow.
• Sharks: They were painted as being firm and fair. She was a bit obnoxious, so they could have been a lot worse.

Next Step Suggestions:

• Focus on all the things the sharks suggested: raise more capital that $30,000 and limit the sized.
• Get someone on the team who will do all of the production so Diedra can sell.

Lessons:

• Come across as confident, but not cocky. Diedra had everyone’s antenna buzzing as a partner because of the egotism and unwillingness to listen.
•  Ask for enough money to focus on the business full-time. A little money only helps a little, and probably won’t help enough.

Follow-up:

• You can find out more at www.HotMamaGowns.com. She has lowered the price from $119 to $89.

(If you are interested in raising capital for your business, visit us at www.AngelNetwork.com) 

George and Rolf have a light up decal for car windows, which attracts a lot of attention. It is a great way to show your loyalty for a sports team or a cause.

Daymond said he was only interested in the second-generation product, had distribution and licensing in place, and wanted 75% of the company. Wow! He also offers unlimited financing and the rights to use all of his licenses. They would never have to look for another investor.

• Presentation: The team presented well.
• Business Strengths: They have invested heavily in developing the opportunity. It is also a really cool idea!
• Business Weaknesses:. It will take a lot of capital to get the licenses. $100,000 is a drop in the bucket.
• The Deal: They wanted $100,000 for 5%. They got $100,000 for 70% and an early distribution of profits until they recouped their investment.
• Sharks: They were clever and collaborative. And they struck a very good deal for all parties. Well done!

• Start with Daymond’s licenses, then find a partner who already has licensing relationships with pro sports teams.

• Licenses of major, well known teams and companies require a lot of upfront capital.
• Cash is not the most important thing for many companies – it is relationships. Relationships take more than just money to create, they take a lot of time.
• And in the real world, your prospective investors will do exactly what these sharks did – they collaborate when evaluating opportunities and making deals.
•  There are a lot of ways to structure deals when you only have one or two investors.

• You can learn more at www.lightfilmdecals.com. They brought out the next generation called PowerDecal ™. And they have licenses with pro sports teams! Check it out – this is a very cool company!
• The PowerDecal for pro teams are only $25. Such a deal!

Third Guest: April Morris, Thin Gloss

April’s company was the next step in her recovery from a life of really tough circumstances. She had already come a long way, having been a very successful real estate salesperson. But she has run out of money, and needs the sharks help to continue.

Our Analysis:

• Presentation: She was poised and charming, but not convincing.
• Business Strengths: Hmmm… She was poised and charming.
• Business Weaknesses:. The weight loss industry is very tough, she was trying to avoid the regulations by being careful on her claims. She was not successful.
• The Deal: She was asking for $80,000 for 20% – got nothing.
• Sharks: They were actually professional and courteous again!

• Go back into real estate sales, or be satisfied with a small company. This product will never be a best seller.

• Going global is not a good solution for poor sales in the US.
• Dramatic sales increases are very rare.
• Weight loss is a tough industry because of the regulations and limits on claims you can make.
• Small companies, under the radar, can stretch the rules a little. Big companies have big targets on their chests.

• You can learn more about Thin Glass at www.expresseffects.com. She is still at it, and has even expanded to a ThinBody brand. She lowered the price from $28.00 for one, to two for $19.99.  We didn’t expect her to throw in the towel, and she didn’t!