'Shark Tank' contestants bag a life-changing deal for their creative Christmas gift
Certain items are seasonal and might not be in demand all year round, but that doesn't stop investors from spotting the potential in them. Entrepreneurs Kausi Raman and Max bagged a deal with two "Shark Tank" investors, who knew that their business, Chompshop, could make it big selling a hot Christmas product. They sought $250k for a 5% stake in their potential subscription-based kids' art company. The duo pitched a safe cardboard cutter that could create any shape and design for kids to play with. "When it comes to working with cardboard, the tools for kids just don't cut it. Scissors. We love you, but stick to paper. Uh, box cutter. Not till you're older. That's why we created the Chompshop, the kids' safe power tool for cutting cardboard and building 3D models with ease," they explained while demonstrating their product.
The unique tool operated on a quick hole-punching mechanism that sliced cardboard without endangering anyone, even if the user came in direct skin contact with the tool's cutting surface. The 'sharks' eagerly tried out the art tool to test its efficiency with cardboard. "Let me show you. If I try shoving my finger, even if you take the cardboard out, nothing," Liechty said, impressing Mark Cuban with the art tool's working system. "The kids love it a lot, but every time a parent gets their hands on it, they can't get enough," he quipped. Kevin O'Leary, whose cardboard cutout was impeccable, inquired if the toolbox came with instructions.
They further disclosed that Chompshop was keen on building STEM skills in children with their monthly subscription-based projects. The business was based on a direct-to-consumer business model. Chompshop art tool was marketed for $230, and its estimated manufacturing cost was $73.81. While discussing sales, Raman disclosed that they raised $1,175,102 through a Kickstarter campaign in October 2023 and added another $1 million to the product since then. In less than a year, the company has already secured pre-orders for 10,000 units, generating $2.1 million in sales even though it has not yet delivered the product to clients. Additionally, Raman revealed that the company invested in a Simple Agreement for Future Equity (SAFE) to raise $5,000 from a family member.
'Mr. Wonderful' stepped in with the first offer of $250,000 for 20% equity, and Barbara Corcoran matched with his stance. However, guest shark Rashaun Williams pulled out of the deal because he wasn't sure about the sales. Cuban countered with $250,000 for 15% equity. Lori Greiner instantly teamed up and suggested they split the 15% equity evenly at 7.5% each. Raman and Liechty grabbed the offer and left with a winning deal.
The company has since partnered with various educational organizations and schools in a bid to promote their eco-friendly and safe art tool. With the future bright, Chompshop aims to integrate fun learning for children of all age groups.
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