This Founder Walked Away From a Major ‘Shark Tank’ Deal–and It Might Have Been Her Best Decision Yet
When pitching your business, always know the value of your company. At least that’s what the Shark Tank investors repeatedly tell contestants who come onto the show.
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On the most recent episode, Kelechi Anyadiegwu pitched Zuvaa, an online global marketplace where designers sell items like clothes and jewelry directly to consumers. She asked for $460,000 in return for a 10 percent stake in the company. The sharks with impressed with Anyadiegwu, who grew a $500 investment into more than $2 million in sales in under two years. But they were hesitant to invest $460,000 for such a small percentage of the company.
"I'm really proud of you and proud of what you have done," Sara Blakely, a guest shark and the founder of Spanx, told Anyadiegwu. "I feel like from what you've been able to do so far on your own, I'd count on you to keep going without having to give up a big chunk of equity that I would need."
Anyadiegwu argued that while she's grown the company tremendously on her own--to the point where she sees $50,000 a month in revenue--she needs a shark's help to scale up and build a larger online platform. Her dream is to expand Zuvaa, which had 85 designers at the time of the show's taping, to include home decor and art.
Mark Cuban, Daymond John, Lori Greiner, and Blakely showered her with accolades but said they didn't want to take a percentage of her company. John said he feared Zuvaa would become a target for lawsuits if he joined, while Blakely and Greiner encouraged her to keep going on her own.
"You are making a tremendous difference in African women's lives. I think you're doing amazing all on your own," Greiner said. "I don't want to take a chunk of your company and for that reason, I am out."
O'Leary was the last to speak. He offered her a $460,000 loan at a 12 percent interest rate in exchange for 10 percent of Zuvaa. Anyadiegwu declined and the sharks applauded her decision to maintain control of her company.
Meanwhile, two other entrepreneurs also walked away from an O'Leary deal. Mike Fox and Pat Hughes pitched Wingman, their company that makes fast-inflating life jacket for water sports. The co-founders wanted $200,000 for 12.5 percent, but after the sharks backed out due to concern's about the company's product and high price, they were left with just O'Leary's offer. He was willing to give them the $200,000 for 50 percent of the company, but the equity was too high for the entrepreneurs.
Fox and Hughes declined O'Leary's offer, prompting the sharks to yell "Good for you," as the two co-founders walked out of the tank. While it pays to team up with a shark, sometimes it isn't worth half of your company.