'Shark Tank': Todd Graves claims double the equity in RigStrips amid $4M valuation drama
LOS ANGELES, CALIFORNIA: In the second episode of ABC's 'Shark Tank' Season 16, Zhach Pham and Steven Graf stepped onto the stage. They were able to negotiate a last-minute deal with one of the Sharks and offered a straightforward yet efficient way to securely fasten outdoor gear against the side of one's vehicle while preparing for an adventure
In an attempt to entice the panel of Sharks to take a big bite out of their firm, the co-founders presented outstanding statistical data and demonstrated a great understanding of the demands of their target market. The duo entered the Tank seeking $300,000 for 7.5% equity. Driven by their shared passion for the outdoors and their personal experiences, Zhach and Steven co-founded RigStrips in November 2019. The flagship items from RigStrips, Magnetic SnoStrip and SunStrip, retail for $49.95.
RigStrips needed Sharks' help to tap into more marketing opportunities
The co-founders revealed that their items are available in both magnetic and sticky versions. The magnetic option is compatible with 90% of vehicles, while adhesive variants are available for 10% of cars made from aluminum. Lori Greiner described the product as the simplest yet most effective solution to a common problem, while Guest Shark Todd Graves recognized the product's need.
The co-founders went on to say that there are no direct rivals for SnoStrip. While SunStrip faces some competition from Amazon, they assert that RigStrips is the clear market leader. So far, they have sold over 60,000 units. Since 2020, their lifetime sales have been over $3 million, with more than half coming in the previous year, indicating the company’s exponential growth
The co-founders aim to generate $2.7 million this year. So far, they have relied solely on Meta advertisements, and they believe the key to reaching their $2.7 million target is to expand their marketing efforts into additional D2C opportunities. "With a customer acquisition cost of $10, they generated 62% of their sales during November and December. The product is considered an excellent gift option.
In terms of profit, their EBITDA was $450K last year, which is impressive. Rig Strips holds design patents for both the SunStrip and SnoStrip, as well as trademarks. The pair required Sharks' assistance with their brand identity and awareness.
'Shark Tank' investors shy away from investing in RigStrips due to high valuation
Mark Cuban sees RigStrips as a product rather than a company. Given that he is not the outdoorsy kind, investing in the firm did not make sense for him.
Kevin O'Leary expressed that the $300,000 investment request was off-putting, considering the company's valuation of $4.6 million to be somewhat high. He considers $300,000 to be a significant amount of money. Lori agreed with Kevin that the stake in the company for $300K is too little for her to invest in, and therefore, she chose not to make an offer.
RigStrips double the equity to score a Shark
Steven Graf stated that they are looking for a Shark to help them with their marketing approach. The group intends to work on other direct online ways as well. The $300,000 investment will primarily go toward inventory, as they need to manufacture more products. Todd Graves offered $300,000 for a 20% ownership in the firm. It was considerably higher than the lads expected, so all they could do was negotiate.
They had anticipated a valuation of $4 million, so they were taken aback when Todd offered approximately $1.5 million. They countered his offer, hoping Todd would reconsider and propose $300,000 for a 10% stake in the company, which would value it at $3 million. Todd countered with an offer of $300,000 for a 15% stake. When all the Sharks advised that this was the best deal they would receive, the co-founders quickly accepted it.
'Shark Tank' Season 16 airs on ABC on Fridays at 8 pm ET. For those who miss the episode, it will be available on demand the following day and on Hulu. Additionally, viewers can explore past seasons and episodes on Amazon Prime Video and iTunes.
