'Shark Tank' judge Kevin O’Leary makes a tempting offer but contestant says no in unexpected moment
There is a plethora of entrepreneurs who would give up a sizeable chunk of equity if it meant getting a deal with Kevin O’Leary on "Shark Tank." Mr. Wonderful has proven time and again that he is one of the most competent and successful investors in the world. However, not everyone is willing to give up a significant part of their company, especially if that company is immensely profitable. It makes for a series of tough negotiations that might not bear fruit.
That’s what happened in an earlier episode of the show in which an entrepreneur named Annie Leal came in seeking $300,000 for 5% of her company, I Love Chamoy. Chamoy is a traditional Mexican candy that’s really popular during Halloween. What makes Leal’s product unique is that the sweetener used is Monk fruit and not sugar. The product was a Chamoy-flavored sauce that one could use as dressing over whatever food they wanted to.
The entrepreneur brought a mariachi band with her, which played the show’s theme. The Sharks loved the presentation and were also blown away by how well the company had done. In the year prior to taping, I Love Chamoy’s sales stood at well over $500,000. Year-to-date sales were a whopping $1.3 million, and Leal expected to end the year at more than $3 million.
From that, she expected $1.5 million in profit. The entrepreneur said that all of her sales were organic as she had nailed the social media aspect of her business. Such a company is a dream-come-true for a lot of Sharks. It had great sales, was profitable, had a highly competent owner, and was without debt. Leal also revealed another product that she had soft-launched, which were sugar-free Chamoy candies.
The candies brought in $30,000 of the sales, as it wasn’t properly launched yet; the rest of it came from the sauce. Everything about the company seemed attractive to the Sharks until Leal said that she wanted to go into the retail space. Now that is a completely different ball game. It doesn’t take the big brands in retail much time to recreate your product and compete easily with pricing and distribution.
Most of the Sharks said no the making a deal after hearing this, but the only one who did make an offer was Mr. Wonderful. He offered $300,000 for 15% of the company. Being in retail might be scary, but with O’Leary on your side, even the big boys in the space would have a hard time competing. The only problem for the entrepreneur was that 15% was too high.
She asked if he would go down to 8% but O’Leary had no interest in going below 12.5%. Unfortunately, that was also much too high for Leal, and she had to decline both of his offers. It just goes to show that no matter how big an investor may be, a profitable business owner would rather stick to their guns than cave in.
More on Market Realist
'Shark Tank' contestant says no to $1.5 million from Mark Cuban — and still walked away a winner
'Shark Tank' contestants convince Mark Cuban to seal a $500,000 deal — even after he backed out
