Ready, Set, Food!
Ready, Set, Food! is a company from Los Angeles, CA, that has come up with a solution for the growing number of childhood allergies: give'n it to them when they're young! No... seriously.
The entrepreneurs behind Ready, Set, Food! say that children aren't born with food allergies and that eggs, peanuts, and milk (three of the most common types of food allergies) can be given to children as babies to get their bodies used to them so they don't form allergies to them later. And the entrepreneurs should know, they're both doctors. They both recommend at least six months exposure to these allergens to avoid a future allergy. And one of the entrepreneurs is particularly passionate about the product because he has a son with food allergies.
The current Ready, Set, Food! product line doesn't cover all food allergies but eggs, peanuts, and milk represent 80% of food allergies children acquire. And, naturally, no child with a pre-existing allergy should use Ready, Set, Food!.
Year to date, the company has earned $250,000 in sales and expect to end the year with $450,000. All sales are made either direct to consumer on the Ready, Set, Food! website or through Amazon. The average customer stays subscribed for 4 1/2 months with a customer acquisition cost of $150 per customer. Ready, Set, Food! is currently developing new products to keep customers subscribed from birth until 4 1/2 years old.
Currently, a subscription is about $48 per month retail cost and costs Ready, Set, Food! $10.50 per item to manufacture.
Ready, Set, Food! does have some competition but the entrepreneurs claim that the only product they offer introduces allergens through apple sauce packets whereas Ready, Set, Food! has patents on both a "guided system" and "bottle introduction" which make them unique.
In terms of prior investment, Ready, Set, Food! has raised $2,400,000
Making A Deal
Barbara takes issue with the fact that the product doesn't tell more of a story and the entrepreneurs try to explain that's why they're sold online, where they can get the story out better. But this isn't enough for her and she promptly drops out.
Mr. Wonderful asks if the entrepreneurs are looking for a straight equity deal because he's got a choice for them. They can either have a $350,000 for 11% equity in the business deal or $350,000 in debt at 8% interest over thirty-six months plus 5% equity because Kevin is Mr. Wonderful after all.
Lori also goes for an unusual structure in her offer. She offers $350,000 as a loan at 2%[1] interest plus 7% equity because she's a shark but also a $1 per item royalty until it earns her $500,000.
With two crazy-pants offers on the table, guest shark Rohan Oza breaks the streak by stating that he thinks Ready, Set, Food! still has too much awareness raising to do and thinks that it would take too much money to effectively get the word out. Therefore, he's out.
But Mark thinks that parents will educate themselves. He offers $350,000 for 10% equity plus an additional 2% in advisory shares with a contingency that for every subscription sold, Ready, Set, Food! give away one for free to a low income family. At this point, the entrepreneurs seems to mistake either the advisory share portion of the offer or the matching subscription as a royalty or something else because they counter his offer at a straight 9.5% in equity. When Mark responds with 10%, they seal the deal.
While this represents a fairly modest bite of $1,500,000 from the original value of $5,000,000, the question remains: is the free one for low income families still part of the deal? It would be a shame if it weren't.
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