If you don't like the deal an investor is offering, try countering. That's the advice Daymond John gave the three co-founders of Tailgate N Go on Sunday night's episode of Shark Tank.
"You guys could have countered," John told the Johnson family as they prepared to leave the Tank without a deal. "It doesn't hurt to ask."
Ron, his daughter Taylor, and son Kobe were seeking $250,000 for 10 percent equity in their line of portable modular kitchens designed for outdoor activities. The family created Tailgate N Go after lugging cooking gear to picnics or camping trips and realizing that they always left something behind. Their Grand Junction, Colorado-based startup sells two iterations--a full-size box for $1,650 and a smaller version for $1,550--that can be outfitted with attachments like a sink, grill, or cutting board to recreate a mini kitchen.
The Johnsons launched Tailgate N Go a year and a half before appearing on Shark Tank and sold about 100 products at six trade shows, they told the Sharks. They hold two provisional utility patents and have invested $250,000 worth of savings into the business.
Some Sharks, like Mark Cuban and Lori Greiner, declined to make offers because they said they don't understand the camping industry, while John thought the company would burn too much capital trying to improve the product. Guest investor Matt Higgins, a co-founder of the investment firm RSE Ventures and a vice president of the Miami Dolphins, expressed concerns that the startup was still in its early stages of development.
Kevin O'Leary made the first offer, but it was less than ideal: He tendered a $250,000 loan with 10 percent interest, a 10 percent stake in the company, and a $100 royalty per unit in perpetuity. That didn't fly with the Johnsons, who politely told O'Leary they didn't accept.
"We've been working so much and for so long towards this goal," signed Kobe--who is the first deaf entrepreneur to appear on the show and used interpreter to communicate with the Sharks--as the family prepared to leave the stage. "Just to be here today, it feels like we are champions already."
That's when John encouraged the Johnsons counter. First, they tried to structure a better deal with O'Leary, but he was concerned that he wouldn't get his money back. Then, they asked Higgins if he would invest $250,000 for 20 percent, noting that his connections to the sports world would be a huge help to the business. Higgins had the same concerns as O'Leary, so he added a $50 royalty until his $250,000 investment is recouped, but agreed to their terms.