Shark Tank's Todd Graves gets Daymond John on board as mentor for $75K KaAn’s Designs deal
With their imaginative and distinctive patterns and prints, KaAn’s Designs has you covered if you want your clothing to be family-friendly and represent your love for your family.
In Episode 6 of Season 16 of ABC's 'Shark Tank', Kenny and Ashley Green pitched their family clothing line, KaAn's Designs, to the Sharks, hoping to secure support that would help grow their business. The husband-and-wife duo walked into the Tank seeking $75K for 15%. The founders revealed that they hold blank inventory, which they then screen print.
KaAn’s Designs boasts a profit margin of nearly 80%
At the time of filming the ABC show, their cost of acquisition was around $9.37, though they did experience a 30% customer return rate. However, when they invest in social media platforms or ads, they see strong returns, typically around 5X, especially during Father's Day. The adult shirts cost $5.12 to make and are sold for $26, while the kids' shirts cost $4.24 to produce and are sold for $21, giving them a healthy profit margin on both products.
However, they don't always make a profit on 5X ROAS. During their highest seasons, which is usually around Father's Day, and during the holidays, their average is closer to 3X. The company’s lifetime sales total approximately $3.2 million from 2016 to the present. This year, they are aiming to reach between $280K and $300K in sales. Their margins are close to 80%.
At the time of filming, they were only spending about 5% of their revenue on ads, primarily due to cash flow constraints. This is one of the reasons they were seeking a Shark's investment. They were profitable the year before, earning $44K. However, they were struggling to keep up with production at their home garage.
Most Sharks passed on the offer to invest in KaAn’s Designs in 'Shark Tank'
Kevin O'Leary felt there was no room for an investor, as he believed the business couldn't get into retail since the margins weren't big enough. As a result, he decided not to invest.
Lori Greiner loved everything about the business but wished she knew more about the fashion industry. Believing there were other Sharks better suited to help, she decided to sit this one out. Daymond John felt the couple would be able to grow the business together to a $5-$10M on-demand business. He passed on the offer too.
Todd Graves ropes in Daymond John as a mentor for KaAn’s Designs in 'Shark Tank'
Guest Shark Todd Graves offered $75K, but as a loan for a 10% stake. Kevin described it as a very standard structure called venture debt.
Todd came in clean, saying the business isn't in his wheelhouse, but he loves the product, and he considers himself to be very good at branding. He emphasized his strength in branding, boasting about taking his first restaurant and turning it into an 800-chain store with millions of customers. He promised to help the founders with some of the branding components and expressed a desire for Daymond to join the offer as a partner and mentor.
Daymond made it clear that he would only join as a mentor and would not be making any investment. Mark Cuban was about to make an offer but felt Todd had better to offer. The couple then asked if Todd would be willing to increase his equity stake in exchange for not doing a loan.
Todd advised them to not give up much equity in their company that could blow up in the future. He gave an example of owning over 90% of his company, Raising Cane's Chicken Fingers. Well, that was good enough to convince the couple, as they took on Todd's offer.
'Shark Tank' Season 16 airs on Fridays on ABC 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.