Third Guest: Kim Nelson, Daisy Cakes
Kim makes cakes with recipes that have been passed downed through the generations in her family. They put a lot of “southern love” in every bite, and ship them nationwide. They are selling a lot, but need money to expand and stop making the cakes by hand, by themselves. Kim wants everyone in the country (on the planet?) to be eating her cakes!
She is asking for $50,000 for 25% of the company, a pre-money valuation of $150,000.
The sharks found them to be delicious. They sell for $44.50 online, with a cost of $18. She mans booths at trade shows to sell the product, and sold $27,000 in three months last year. (That’s pretty good!)
Kim works in a commercial kitchen now, and can scale to make 5,000 cakes a month. Hmmm…But she has no outlets selling her cakes, so distribution is questionable.
Kevin H gets dozens of catalogs every month, and sees a lot of cakes and pies for sale. He sees this as a word of mouth business, and was out.
Kevin O loves the cake, but thinks turning it into a business is a big challenge. He was out.
Robert wished her well, but didn’t see how the business would scale, so he was out. Daymond too.
Barbara likes Kim and thinks the business is too small. She made a counter-offer of getting $1 back on every cake, so she gets her money back soon, with the condition that mom goes with her and the money is used for trade shows. Kim took the deal!
- Presentation: She was charming and cute, in contrast with the first presenter, who was also cute but not so charming. She was open to advice and seemed like a great person to work with.
- Business Strengths: The cakes tasted great! And the story (family recipes, passed down through the generations) is a good one.
- Business Weaknesses:. Scalability is an issue, as is differentiation in the mind of the consumer. How can I tell how good the cakes are without tasting them?
- The Deal: She wanted $50,000 for 25%. She got it, with a royalty clause back to Barbara.
- Sharks: They were down right charming themselves. Even Kevin O!
Next Step Suggestions:
- Listen to Barbara; focus on the trade show circuit and celebrity endorsements.
- Scalability is a big deal. Some business will work very well on a small scale, but not on a large scale.
- Investors want to play the game of growing your business with you. Be a good partner and let them play.
- You can learn more about them a http://www.ilovedaisycakes.com/. Nice website!.
(If you are interested in raising capital for your business, visit us at www.AngelNetwork.com)