Season 5 | Episode 512 | EP521
In Season 5, Episode 12 of Shark Tank, Evan Mendelsohn & Nick Morton approached the Sharks seeking an investment of $100,000 in exchange for 5% equity in ‘Tipsy Elves’. The ugly sweater company is currently based in San Diego, California.
Tipsy Elves is a fashion company which attempts to be as ‘unfashionable’ as possible. Their products are designed to look ugly. Their product range is pretty much similar to what you would expect your Grandma to knit you for Christmas. In some of their products there is a little bit of inappropriateness thrown in for good measure. If you’re looking to win an award for the ugliest Christmas sweater; look no further because Tipsy Elves has got you covered.
The duo revealed that the company was able to generate sales of $800,000 in 2012. The majority of these sales were gained through product listings on Amazon. While the Sharks, Lori Greiner in particular, agreed that these sales were quite remarkable for a new product they also agreed that the product was most likely not unique enough for investment. Lori pulls out at this point. Mark Cuban pulls out shortly after because he does not believe that there is enough scope for the growth for the company. This means that it would be slightly more difficult to gain a return on investment.
Another sticking point for the Tipsy Elves team was the fact that the product is remarkably seasonal. It would be unlikely that people would be willing to purchase ugly Christmas sweaters outside of the holiday period. There is however scope to introduce new products to the range but the Sharks are worried that they may not have the same appeal.
Kevin O’Leary: $100,000 in exchange for a $2.00 royalty on each product until his investment is recouped. He would then want $1.00 on each sweater sold after this. He did not require an equity stake in the company.
Robert Herjavec: $100,000 in exchange for 10% equity in the company. He is willing to put this amount of cash forward because he believes that Nick has demonstrated an incredible amount of passion for the product.
The Tipsy Elves team decide to accept the offer that Robert Herjavec placed upon the table. This meant that they ended up leaving the Shark Tank with $100,000 in funding which should hopefully allow them to get their product onto retail shelves. They also left with the experience of a Shark who knew exactly what was required to get them there.
Robert Herjavec tends to only invest in well executed businesses that have paying customers. If you want to capture Robert’s attention quickly, have a good story, be humble, know your numbers and understand good timing.