Season 5 | Episode 503 | EP503
In Season 5, Episode 3 of Shark Tank, Chris Johnson approached the Sharks seeking an investment of $300,000 in exchange for 10% equity in ‘Rapid Ramen’. The company is based in Sacramento, California.
Rapid Ramen is a microwavable container designed especially for Ramen noodles. This ‘easy to clean’ unit allows quick cooking of Ramen Noodles (far quicker than on the stove) while reducing the amount of mess to clean up afterwards. In addition to this, microwaving the noodles reduces the amount of seasoning required. This in turn makes the product great for those who are looking to limit their sodium intake.
The Sharks were instantly taken in by the amount of work that Chris Johnson had already put into selling the Rapid Ramen. He noted that a few weeks prior to the pitch he walked into his local Wal-Mart store and spoke to the manager about having his product on the shelves. The manager agreed. His ramen cooker sold out in days. At the time of the pitch Chris was selling four rapid ramen cookers each minute on average through his online store. All in all he had received well over $160,000 in sales. He also noted that he had a number of orders to fill however he required an investment in order to manufacture the product. This is why he was in the Shark Tank.
Kevin O’Leary: $300,000 with $1.10 per unit sold up until the $300,000 is paid off. Kevin would then want a $0.50 royalty on each Rapid Ramen cooker sold after this.
Robert Herjavec: $300,000 in exchange for 40% equity in the company.
Kevin O’Leary & Robert Herjavec: $300,000 for 25% equity in the company. This would involve a 75 cent royalty on all Rapid Ramen Cookers sold until the initial investment is paid off. Upon being paid off the pair would receive 25 cents per Rapid Ramen Cooker sold.
Mark Cuban: Despite withdrawing from proceedings early on in the process Mark decides to come back in with an offer. He offers $150,000 for 20% of the company with a further $150,000 being treated as a loan. Chris states that he will be more than willing to accept this offer if it was reduced to 15% equity in the company.
Chris Johnson accepted Mark Cuban’s offer of 15% of the company in exchange for $150,000. An additional $150,000 was accepted as a loan.
Mark Cuban has invested into over 80 ventures and counting. Mark looks for unique companies and products that can be game changers or strategic to a theme he likes or to another portfolio company. Avoid the word “passion” at all costs.