The Handbag Raincoat, RewardStock, WISP and The Kombucha Shop

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In a historical night for the Shark Tank, four businesses entered the Shark Tank looking to strike a deal with a group of Sharks that was predominately female. This is the first time in Shark Tank history that the female investors outnumbered the men. The Handbag Raincoat, RewardStock, WISP and The Kombucha Shop all came to the tank seeking deals from Lori Greiner, Mark Cuban, Kevin O’Leary, Barbara Corcoran and guest Shark, Sara Blakely.

The Handbag Raincoat Fails to Catch a Deal

Morgan and Arley Sarner entered the Shark Tank seeking $300,000 for 25% ownership of their company, The Handbag Raincoat. This product is designed to protect one of a woman’s most expensive accessories, her handbag, during rain or weather events. After working in this industry and seeing a clear need for this product, Morgan and Arley purchased shower liners and hook and loop closure to make the first prototypes of their product from their living room. They currently have $125,000 in sales year-to-date and are running test markets with Bed, Bath and Beyond, Nordstrom and The Container Store.

Although the company has not done formal marketing, they also appeared in Oprah’s magazine which lead to airtime on “The View.” Presumably because of their promotion and design, The Handbag Raincoat has seen some competition pop up in the market, including a very prominent handbag manufacturer, which has caused them to have to spend money on legal proceedings to shut them down. They currently own about 84% of the company and are looking for strategic partners for growth capital.

Although the Sharks are impressed with their pitch and enthusiasm, they begin to evaluate their business and quickly begin declining to make an offer. There is concern among the Sharks that although The Handbag Raincoat has been given a lot of opportunities, the company has not grown. The presence of persistent competition, especially from a major corporation, is a scary and costly venture for the Sharks. There is also concern that the current margins are not sustainable and that it would be very difficult for a Shark to make back their investment. The Handbag Raincoat ultimatly leaves the tank without a deal.

RewardStock Solidifies a Deal with Mark Cuban

Princeton graduate, Jon Hayes, left his career as an investment banker on Wall Street to start his company RewardStock. RewardStock is an automated travel advisory service that takes accrued frequent flyer miles, hotel points, etc and with your input and interests, converts them into inexpensive and affordable vacations. Jon is asking the Sharks for $200,000 for a 5% ownership of his company. His current challenge is that he doesn’t have enough money to bring on another programmer to accelerate progress of the company.

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Although the Sharks are very interested in this service, they are concerned by the lack of money that the company has made. The company makes money on a yearly subscription fee, but also on referrals. In two years they have only made $50,000 with around 10,000 users. Although the financials are concerning, Kevin is immediately interested as he feels that this could play very well with some other businesses that he has his hand in, but he is concerned with the valuation of the company. He offers $200,000 for 10% of the company. Unsure of the deal, Jon asks Mark if he had a deal and he offers $320,000 for 10% of the company and 1% in advisory shares. Jon accepted his deal.

Things Get Heated in The Shark Tank for WISP

WISP entered the Shark Tank in hopes of obtaining $500,000 for 10% of the company. WISP is a replacement product for the traditional broom and dustpan. The WISP broom is lightweight and can be used with one hand instead of the cumbersome methods needed for a traditional broom and dustpan set. The bristles are short, dense and angled to allow the use 1 hand while simultaneously using one foot to seal the dustpan to the ground. This allows all of the floor debris to easily be swept into the pan for disposal without leaving anything behind.

Although the company has seen lifetime sales of $3.3 million, it became apparent very early in the pitch, that the creator of WISP had made some serious errors in judgment that have left the business with a deficit of $2.1 million dollars. The Sharks also learned that WISP has 22 total investors and is sitting on $300,000 of inventory. This makes all of the Sharks very nervous and tensions are running high in the Tank.

Sara Blakely provided excellent advice to WISP when she shared a solid piece of business advice: as soon as you are able, hire someone whose strengths are your weaknesses. She explains that while the product is good, the business and marketing decisions have been really bad and that WISP is in desperate need of help in that area. Although she likes the product, she does not want to invest in it due to the financial health of the company.

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Kevin agrees that they desperately need a partner to help them make better strategic decisions as well as a consistent supply chain. He offers $500,000 but for a 50% stake in the company. Lori mentions that while she will not invest money in the company because she can not wrap her mind around all of the debt, she will help Kevin O’Leary to sell this product to her market. Kevin ignores her comments and things get a bit tense between the Sharks. WISP initially accepts Kevin’s offer, but then asks why he wasn’t willing to work with Lori as well. Kevin become very angry at this question since Lori isn’t offering any financial help and immediately withdraws his offer and kicks WISP out of the Shark Tank without a deal.

The Kombucha Shop Secures A Deal With Two Sharks

Kate Tecku entered the Shark Tank hoping to receive $350,000 for 10% equity in her company, The Kombucha Shop. Their flagship product is a kit that allows Kombucha fans to grow their own Scoby, the key ingredient in Kombucha, at home. The user essentially brews the kombucha tea using the provided flavors, drops in the Scoby tablet, seals the container and allows the fermentation to happen over the next 10 days.

Although there are many probiotic health benefits to Kombucha, Kate decides not to focus on these in her marketing as she feels that her target market is already education on the power of Kombucha or they wouldn’t be looking to make their own. Kate has been a one-woman show who has been dominating consumer and online sales, but is looking for a partner to help her enter retail markets. The Kombucha Shop has a very healthy bottom line. The entire business model and the financial report has many Sharks interested, although they admittedly did not care for the taste test of the samples. Before all Sharks can offer a deal, Kate quickly accepts a deal from both Barbara Corcoran and Sara Blakely for $200,000 in cash and $150,000 on credit for 10% of the company, turning down a deal from Kevin O’Leary for $350,000 for 20% equity.

What was your favorite business on Shark Tank tonight? How did you feel about the business investments? Leave your comments below!

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Shark Tank airs Sunday at 9:00 EST on ABC.





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