'Shark Tank' founders came to the show hoping for $400,000 — they walked away with $1 million offer
The judges on "Shark Tank" are known to be sharp. They are always on the lookout for a deal and they often tear entrepreneurs to shreds to get their way. However, sometimes, they can be quite generous as well, like the time when the founders of Yellow Leaf Hammocks got the deal of a lifetime. Joe Demin and Rachel Connors, who entered the Tank seeking $400,000, got a surprising offer of $1 million from a Shark who wanted to support their mission.
The couple and co-founders entered the Shark Tank to pitch their product that provides the ultimate relaxation in every setting. Pitching their company, Yellow Leaf Hammocks, the entrepreneurs asked for an investment of $400,000 in exchange for 7% equity in the business. "At Yellow Leaf Hammocks we've perfected the hammock for the modern consumer. We've conquered every obstacle from creating a cocoon-like no wobble design to a shockingly soft yarn so you won't get a rope burn when you're trying to relax, and they're completely weather safe," the co-founders explained.
As they handed out samples of their products to the Sharks, Joe shared the backstory of the company. Joe shared that he came across the idea during a backpacking trip in Thailand. There he used a really soft, woven hammock while visiting a remote island, and he learned that it was made by a community as part of an economic program designed to get them out of poverty. He ultimately went to meet the weavers and learned that they were struggling with sales. Thus, to help them, he and Rachel decided to start a hammock company and give a boost to their product.
"First thing you want to look at is the label... they're all signed by the woman who made it," Joe told the Sharks. "We're a social enterprise, and we work with moms in rural Thailand to create high-wage jobs," they added. Coming to the numbers, the co-founders shared that they did $860,000 in sales in the year before filming, and they aimed to close the current year with $1.3 million with a 50-50 balance between direct-to-consumer and retail sales. They had also partnered with Virgin Cruise Lines to provide hammocks for their ships, adding another credit to their business.
Big numbers
The Sharks were beyond impressed by the entrepreneurs, their product, their numbers, and their mission. Guest shark Daniel Lubetzky was the first to make a move, and he made sure it was a grand gesture. "I really love a lot of what you stand for, but you have a hundred thousand dollar profit with a crazy 5.7 million dollar evaluation. So my offer is as follows, and it's an explosive offer. I want 33% of the company, and I'll give you one million dollars," he told the entrepreneurs.
Unfortunately, Joe and Rachel didn't want to give up so much equity, so they decided to hear the other offers. Taking on the opportunity, Lori Greiner jumped in with an offer of $400,000 for 20% equity. The entrepreneurs countered both the Sharks with a deal for $1 million at 25% equity, but Greiner refused to go up to $1 million.
Lubetzky then changed his offer and put $500,000 on the table for 25% equity. However, the entrepreneurs countered him with an offer of 14% equity for $600,000. At this point, Robert Herjavec jumped in as well, with an offer of $400,000 for 15% equity.
Greiner then changed her offer as well, putting up $200,000 in cash, a loan of $200,000, and fully funded purchase orders for 15% equity. Lubetzky also looked to change his offer and asked the entrepreneurs how much they were willing to give up for $1 million. The co-founders came back with a maximum of 25%, and Lubetzky accepted it.
"Wow! I never thought he'd go down it's never happened before in Shark Tank history when someone came in here for four hundred thousand and walked out with a million," Kevin O'Leary said as they shook hands.
