Luma Soda
If you're the type of person who drinks more than twelve cans of diet soda a day, chances are, you're not overly concerned about the effects of artificial sweeteners. But, if you are, you might go and create your own soda company to ensure that it's not straight up poison.
The entrepreneur behind Luma Soda, a company out of Palo Alto, CA, did exactly that. Saying that soda, sports drinks, and even old apple juice all contain too much sugar, this entrepreneur created a line of drinks sweetened by honey and monkfruit.
Luma Soda offers several different flavors including classic Cola (liked by very few of the sharks), Cherry Cola (liked by all but Lori), Blood Orange (liked by everyone), and Lemon-Lime (liked by none of the sharks).
Luma Soda, in the year in which this episode was filmed, has earned $180,000 to date in direct to consumer sales. Unfortunately, repeat sales have not been "very high" and the entrepreneur reports that it's been as low as 10%, though he attempts to soften it by saying that the company has many comments asking when it will be sold in their area. One twelve-pack of Luma Soda sells for $19.99, certainly on the high side for pop.
Thus far, all of the capital put into the company has come from the $1,750,000 the entrepreneur invested into it against a home equity loan and the value of his life insurance. Luma currently has $600,000 in inventory and just $30,000 in cash reserves. The company is currently burning $15,000 a month in online marketing. On the upside, the company has no debt.
When questioned why the company has so much on-hand inventory, the entrepreneur stated that the minimum order for cans is 204,225 units (or one truck load) per SKU.
Guest shark Rohan Oza says that to free up cash, Luma Soda should move its inventory at local California stores and the entrepreneur reports that he has three potential orders.
Lori states that she likes flavored waters but doesn't drink sodas and really doesn't like his flavors and is out.
Rohan states that he liked the blood orange and cherry cola flavors but that standard cola is the hardest flavor to get right. Barbara offers $250,000 (half of the amount being asked for) on the condition that Rohan comes in with the other half. But Rohan says he sees the business as a "zero scale startup", prefers to work with entrepreneurs that he can "turbocharge", and that he just doesn't see that with Luma Soda and drops out of the deal, taking Barbara out with him.
Mr. Wonderful says that the entrepreneur should just close down shop and, like the others, exits the deal.
Mark offers the most enouraging words, stating that there's usually a path forward, an entrepreneur just has to find it. He suggests discounting his existing inventory to cost to acquire sales and then try moving forward from there but that the business just isn't a fit for him and that he's out.
Luma Soda left the tank without a deal.