Season 5 | Episode 510 | EP510
In Season 5, Episode 10 of Shark Tank, Kelley Coughlan & Jenn Dees approached the Sharks seeking an investment of $55,000 in exchange for 12% equity in their Purse Case. The company is currently based in Los Angeles, California.
The Purse Case is a smartphone case. It is a very small clutch which is just large enough to allow somebody to carry their cash, cards, phone and ID cards. The Purse Case is incredibly stylish and the design was based on products which were gaining in popularity throughout Europe.
The pair announced that they had achieved pre-order sales totalling $30,000 in three months for their cellphone purse. They were anticipating generating sales of $240,000 in the first year alone. Profit margins are relatively high with the product having a manufacturing cost of $4.42. The product is then sold wholesale at $15 with a retail value of $38.00.
The Sharks are concerned that there are already similar phone accessories available on the market. In fact, Lori Greiner indicated that similar products were already being sold on QVC to great success marketed as the mobile phone purse. The idea obviously can’t be patented and they believed that if the Purse Case were to be successful, and it is likely that it will be, then there is nothing stopping competitors popping up and selling similar products. Lori refused to pull out of discussions at this stage however. Similar products had demonstrated that the market was there. Whether this particular product would be successful was another thing altogether however.
Kevin O’Leary: $55,000 in exchange for $1.00 per unit royalty until his initial investment is recouped. He would then receive $0.75 in royalties per unit sold after this. He would not require an equity stake in the company.
Lori Greiner: $55,000 in exchange for 15% equity in the company.
The duo decided to accept the offer that Lori Greiner had placed on the table. While the equity stake was slightly higher than they wished to give away initially, the pair believed that the extra 3% would be more than worth it based upon the connections that Lori had in the industry. Lori pledged that she would be able to get the product listed on QVC and this should be able to generate a significant amount of sales as a result. This was clearly an offer that they would be unable to turn down.
Lori Greiner has helped launch over 400 products with a 90% success rate on new items launched. Lori looks for products that solve a problem, can be sold at a reasonable price and are appealing to the mass market.