RigStrips Founders Engaged In Negotiations On Shark Tank Season 16
Highlights
- RigStrips appeared in front of the investors during the second episode of the sixteenth season.
- Steven Graf and Zhach Pham sought $300K for 7.5% equity in the company.
- After intense rounds of offers and counteroffers, they accepted guest Shark Todd Graves’ deal.
Entrepreneurs on Shark Tank approach the investors for help with either growing or saving their businesses. While doing so, they ask for an investment amount and often end up giving a larger equity share than what they propose in the beginning. The same happened in the RigStrips deal on Shark Tank Season 16.
While the founders entered the show seeking $300K for 7.5% equity, they ended up giving a doubled equity share after an offer from guest Shark Todd Graves. Below is a complete recap of what happened during the deal and why they agreed to his offer.
RigStrips Pitch: Shark Tank Season 16
The entrepreneur duo of Steven Graf and Zhach Pham made their way to the Shark Tank judges in the second episode of Shark Tank Season 16. They started the RigStrips pitch by describing themselves as ski lovers and discussing how they struggled with scratches on vehicles due to the edges of skis and snowboards.
After giving a small live demo, they presented ‘SnoStrip’ as the solution to this pain area. A magnetic holder, this product could be attached to the exterior of vehicles and used as a case to hold skis/snowboards. As the items would not directly come in contact with the vehicle, the problem of scratches would be gone.
Thus, using ‘SnoStrip,’ skiers or snowboarders could lean their skis or snowboards in a worry-free way.
The RigStrips founders further revealed that keeping in mind the time of summer, they had prepared ‘SunStrip,’ another similar offering. With this, users could rest their fishing rods during the summertime without worrying about scratches on vehicles.
Steven and Zhach then said that the idea originated in 2019 after the entrepreneurs’ skiing experience in Colorado. After hunting for a solution for car scratches, they came up with RigStrips.
The RigStrips entrepreneurs wanted help from the investors on Shark Tank Season 16 to bring their innovative products to more customers through improved marketing.
RigStrips Negotiations: Shark Tank Season 16
Once the pitch was done, the entrepreneur duo offered samples of SnoStrip and SunStrip to the panelists. They also stated that the products were not limited to magnetic holders. They also sold adhesive holders. However, 90% of cars are magnetic, so demand for magnetic holders was higher.
At the time of their launch, they only started with adhesive products. However, after user feedback, they also developed magnetic ones.
Guest Shark Todd Graves was interested in the product but wanted to know about the competition. Steven said SunStrip does not have any competitors, but SnoStrips does have some competition on Amazon.
However, they claimed to be the main brand name in the space and have sold 60,000 units to date. The landing costs for SnoStrip are $8.50, and for SunStrip, they are $7. They also handle shipping for customers, which costs $8.50. The selling price is $50.
Sales from 2020 to date are $3 million, which received a thumbs up from the Sharks. The entrepreneurs are projecting $2.7 million in sales this year. 62% of their sales happen in November and December. EBIDTA last year was $450K.
Their spending has been on Meta ads only. Further, customer acquisition costs are $10.
Why RigStrips Accepted Todd Graves’ Offer
After the Shark investors heard the pitch and got an idea of their business figures, they all stepped out of the deal one by one. Mark Cuban felt the offering was more a product than a company. Plus, he said he was not an ‘outdoor person’ and exited the deal. Kevin O’Leary, too, opted out due to the $4 million valuation.
Guest Shark Todd Graves, too, was apprehensive about the valuation but made an offer. He proposed $300K for 20% equity. Kevin felt that having an offer was better than having nothing, so they should be excited about it. Steven said they were, but the offer was asking a lot more than what they expected to give.
Lori Greiner thought Todd’s deal was a good one; she decided not to propose an offer.
This is how the founders of RigStrips were left with only one offer from the Sharks.
As stated earlier, they sought an investor on Shark Tank Season 16 because they wanted help with marketing strategies and to focus on other direct, online routes. The end goal of RigStrips was to build a brand name and achieve recognition.
$300K of what they made went mostly to inventory. So, they need to make more products to hit their target of $2.7 million for this year. This way, they would get another $50K to experiment with the other marketing channels.
Guest Shark Todd Graves said that he was a user of such products, so he realized the demand for RigStrips. Further, to portray himself as the most ideal Shark investor, he asserted that he could help them with marketing with his large team of experts.
The guest Shark then tried to capture the founders’ attention by telling them about his experience at Raising Cane’s. He said that the first way he marketed its first location was by making copies at Kinko’s and putting it on everybody’s windshield. Those cost him about half a cent per piece.
Given this backdrop, Todd stated that he did not like spending ‘huge amounts on media.’ Instead, he and his team could help the RigStrips founders with what they needed.
The remarks by Sharks like Kevin and Lori that Todd’s deal was a good one, along with this constant reiteration of his marketing abilities, pushed Steven and Zhach into accepting the deal. Initially, they did counter his offer and asked for $300K for 10% equity, which Todd denied.
Ultimately, with no other offers and realizing the value that Todd could add to RigStrips through his previous marketing wins, the founders surprised everyone and took up the deal for $300K at 15% equity.
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Conclusion
The decision of RigStrips founders to accept a doubled equity offer from Todd Graves reflected their strategic choice, which stemmed from their marketing needs. During their Shark Tank appearance, the duo realized the value Todd could bring with his exemplary marketing background.
So, they went ahead with a deal that not only offered them with required funding but also aligned with their marketing goals.
Entrepreneur, auteur, raconteur. Rob Merlino is a blogger and writer who enjoys the Shark Tank TV show and Hot Dogs. A father of five who freelances in a variety of publications, Rob has a stable of websites including Shark Tank Blog, Hot Dog Stories, Rob Merlino.com and more.
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