'Shark Tank' contestants get a deal from two judges even though their brand had a confusing name

The entrepreneurs had a good reputation as they had founded a successful ice-cream brand earlier.

PUBLISHED 2 HOURS AGO

Screenshots showing Lori Grenier and the entrepreneurs on "Shark Tank" (Cover Image Source: YouTube | Sony Pictures Television)

Ventures selling healthy food usually tend to impress "Shark Tank" investors, and a low-calorie chocolate brand built by two proven businessmen sounds irresistible. That is exactly what a couple of entrepreneurs pitched in an earlier episode of the show. The name of their brand was confusing to the sharks, but that did not stop them from getting a fantastic deal from a couple of them.

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The company was called Gatsby, and the entrepreneurs, Ryan and Doug Bouton, wanted $500,000 for a 5% stake. Obviously, the sharks believed that was way too high, but these entrepreneurs were extremely credible. The Boutons were the brothers behind the successful low-calorie ice cream brand Halo Top. They had sold the company after achieving great success with it, and the sharks were all impressed to learn this.

The brothers said that they had recorded more than $2 million in sales the year prior and were on course to make just under $2 million in the year of taping. However, they did not have free cash flow as they had lost $3.5 million the year before. This would not have looked too attractive to the sharks, but perhaps the reputation of the entrepreneurs kept them interested. The chocolates even sold for $3.99, which was a competitive price in the market.

Screenshot showing the products. (Image credit: YouTube | Sony Pictures Television) — Screenshot showing the products. (Image source: YouTube | Sony Pictures Television)

The Boutons also said that they were in 6,000 stores, meaning that they had distribution figured out and a clear path to improving margins per product to 50%. However, guest shark Candace Wilson and Lori Greiner had an issue with the name of the brand. “I am so lost on the name,” Wilson said. The entrepreneurs said that the name had come from the popular book "The Great Gatsby." They believed it was great for a premium chocolate product.

Unfortunately, the sharks did not think so. “I don’t love it,” Wilson said, and Greiner agreed. “I agree with you 100%. I look at this, I knew it was a chocolate bar, but beyond that, I didn’t know what this was,” the latter said. “And then the name Gatsby, and there’s a martini at the end for the Y, I was thinking that this was somehow like liquor-flavored chocolate.” Despite her viewpoint, it was Greiner who offered the first deal.

Screenshot showing guest shark Candace Wilson. (Image credit: YouTube | Sony Pictures Television) — Screenshot showing guest shark Candace Wilson. (Image source: YouTube | Sony Pictures Television)

She said that she’d give the entrepreneurs $250,000 normally and $250,000 as a loan at 6% interest for 20% of the company. Kevin O’Leary came in and said that he’d give the whole $500,000 as venture debt for 12% equity. The entrepreneurs then revealed that they wanted to get a shark’s face on the product as a marketing strategy. Greiner was open to that but wanted 25%.

However, the brothers then turned to Mark Cuban, and Greiner did not like that. She rescinded the 25% offer and made the 20% offer again. She then went to Cuban herself, as O’Leary was making a pitch for his deal. The two said that they’d offer $250,000 as a loan and $250,000 normally for 20%. However, that stake would go up to 30% at $10 million in sales and to 40% at $20 million.

This was a decent deal, but the entrepreneurs were still a little skeptical, as this would hinder them a bit if they wanted to sell the company. So, all parties agreed that the 40% equity trigger would come into play once the company hit $50 million in revenue.