Snacklins
Snacklins is a company from Rockville, MD, that makes a healthier version of pork rinds. With the entrepreneur being Muslim and having a prohibition on eating pork, he set out to create a pork rind or "cracklin" that he could eat.
Snacklins are made out of mushrooms, onions, and yucca. The whole bag is also only eighty calories. It comes in Chesapeake Bay flavor, BBQ, and a Miso Ginger flavor. Like any good bag of snack foods should be, it's shelf stable.
The sharks are generally complimentary toward the product with Barbara stating that she enjoyed the lightness. Kevin was a bit more on the fence, stating that the first Snacklin was like paper but by the fourth one he was into it. All of the sharks liked that the bag was only eighty calories.
Last year Snacklins did $200,000 in sales. In the current year, they predict making $2,000,000. Bags sell for between $1.99 and $2.99 and cost only $0.90 to manufacture. Originally, Snacklins launched in thirty-six stores but is now in 850 including Walmart, 7-11, and Whole Foods. The entrepreneur claims to have a 30% gross margin. The entrepreneur said he decided not to use a co-packer but instead to build his own factory in order to build American jobs. Barbara very much approves of this move.
In terms of prior investment, Snacklins has raised $1,500,000 from friends and family and angel investors. The entrepreneur stated that he is raising money because the company is eleven to twelves months away from profitablity but only has ten months of runway and wants to extend that until the business becomes self-sustaining.
Making A Deal
Barbara says that Pipcorn[1] is in 3,500 stores and has made almost no profit and, in the meantime, almost a third of the business has been sold off becuase companies like thast require constant cash. Because of her experience with that, she's out.
Lori thinks that the business is too risky and too early for her. She also isn't thrilled about the $10,000,000 valuation put on the company at this stage and is also out.
Guest shark Rohan Oza likes the ingredients but he's also not thrilled with the valuation or the fact that Snacklins built its own factory because he doesn't see it as being economically viable.
Mark jumps in on this last point and brings up his investment in Alyssa's Cookies (a company that isn't actually a Shark Tank company but is one that will be addressed because of the number of mentions of the show). He says that Allyssa's has done $20,000,000 in sales which has resulted in $8,000,000-9,000,000 in distributed profits. The entrepreneur wanted to own a factory to produce their product and Mark was against it but, as Mark admits, he later saw the light.
Mark says that he won't argue the value on compensation but that 2.5% is too little for his time and says that he needs a "whole lot more". But, rather than making an offer himself, Mark asks the entrepreneur to come back to him with another offer or he's out.
The entrepreneur comes back with 5% equity but Mark says he turns down deals like that everyday. Fortunately, he has the other sharks on his side and they each begin to lay into the entrepreneur about the size of his ask. Eventually, the entrepreneur relents but states that he's concerned about giving up more equity because he only now owns about 30% of the business.
Mark responds by asking for 5% in additional equity in advisory shares that would vest over the next three years for the same $250,000. Because advisory shares exist on the cap table to be given away to important investors in exchange for the expertise and... advice, the entrepreneur agrees and Mark merely bites half the value off the company.
Notes
- ↑ This deal originally aired on Episode 6.08 and was, at the time, called Pipsnacks.