'Shark Tank' contestant tempts Kevin O'Leary with royalty but rejects his offer in the end
Among investors on "Shark Tank," the one who's always eyeing royalties is Kevin O’Leary. In an earlier episode of the show, he said no to investing in a company. However, when the entrepreneur said that he was open to a royalty deal if it meant giving up less equity, Mr. Wonderful was more than willing to do it. But this time, it was he who was rejected as the entrepreneur chose a different shark.
The entrepreneur was a man named Jake Dilion, and his company was called Fila Manila. It is a company that sells various types of Filipino sauces, which he believed had a growing market in the United States. He asked for $250,000 for a 5% stake in his company. The $5 million valuation was high for the sharks, and they hoped that Dilion had decent sales. Unfortunately, that was not the case.
The company had recorded sales of $400,000 the year prior, and at the time of taping, it had only done $150,000 year-to-date. This was because they had shifted from glass packaging to plastic, as the former was highly expensive. Dilion called it a transitional year, which O’Leary did not buy at all. The sharks loved the food, but the numbers simply did not add up to a $5 million valuation.
Fila Manila had spaces in four regions in Whole Foods, which was a positive, but not enough for most of the sharks to make an offer. Most believed that the valuation was not justified, and they were not fans of the entrepreneur’s plans going forward either. The only one interested in it was guest shark Daniel Lubtezky. However, he wanted 20% of the company for $250,000 and nothing less than that.
This was obviously a lot higher than what Dilion wanted to give up. That’s when he revealed that he had been a fan of the show for many years and borrowed one of Lori Greiner's tricks. He pulled out a golden card with the word “Royalty” written on it. The entrepreneur then said that he’d be willing to agree to giving Lubtezky 5% of wholesale and 8% of online sales as royalty until he made back his money and a 5% stake in the company.
Lubetzky was not interested in a royalty deal, but Mr. Wonderful jumped at the opportunity. He modified the deal so that he got $500,000 back and a 10% stake in the company. It seemed to be closer to what Dilion wanted, but he did not seem interested in accepting the offer. So, he looked to the guest shark, who made a final change to his deal.
He said that he’d be willing to do the deal for 20% of which Dilion would get 5% back if certain benchmarks were met. This was an acceptable offer, and a deal was agreed. The rest of the sharks had a field day poking fun at O’Leary as his offer was rejected.
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