Selling a Company on ‘Shark Tank’ is Rare. Here’s Why These Co-Founders Parted Ways With Their Business
While the Sharks have made company buyout offers before, most entrepreneurs aren’t willing to let go of their businesses.
PHOTO CREDIT: Getty Images
Walking out of Shark Tank with a deal is great, but leaving as a millionaire is even better.
On Sunday's episode of Shark Tank, Daymond John agreed to buy Moki Doorstep, which makes an attachable vehicle sidestep, for $3 million. Husband-and-wife team Alyssa and Zach Brown co-founded the company in January of 2017, generating $116,000 in sales through a Kickstarter campaign. The couple came to Shark Tank seeking $150,000 for 5 percent of their Newington, Connecticut-based company, which sells a heavy-duty step that attaches to car doors, allowing the user to reach the roof of the vehicle.
"Who thinks of these things?" John asked as the couple presented their product.
Avid outdoorspeople, the Browns enjoy kayaking and skiing, but Alyssa struggles to strap equipment to her car's roof because of her height. Zach, a firefighter, has experience prying open cars to rescue people and knows that the striker on a car door--a metal hook installed in most car models--can hold more than 2,000 pounds, making it a solid base for a step.
While the Sharks were impressed with the product, they questioned the Browns' $3 million valuation. "It sounds a little rich for something that was just launched," said Kevin O'Leary. Zach explained that a car rack company offered the Browns a licensing deal at a $3 million valuation.
John offered the couple $450,000 for 20 percent equity. "For that amount of equity, we'd just be better selling it outright," Zach said. "If the offer was right, I would sell it."
Why would two entrepreneurs looking to grow their business be willing to part ways with their entire company? Zach explained that he and Alyssa both enjoy their jobs outside of the company--Alyssa works as an emergency room nurse--and that they were expecting their second child. John instantly offered them $3 million for the entire business, which they quickly accepted.
While the Sharks have made company buyout offers before, most entrepreneurs aren't willing to let go of their businesses or don't accept the proposed price.
"How does it feel to be a millionaire?" Cuban asked Alyssa as she hugged John.
"I don't know," she said through laughter.