Two founders pitch a baby breakfast product with a $54.95 retail price and $9 manufacturing cost. They ask $300K for 2% equity at a $15M valuation. After negotiation, investors settle at 5% equity for the full amount.
$300,000
$15 million
2%
$54.95
$9
Today we are asking for $300,000 at a $15 million valuation.
Brad, how much equity are you looking to give up? 2%.
Picture this. You've slaved away to make a nutritious breakfast for your baby, only to have them throw it all over the floor. You're exhausted and now you have to get down on your hands and knees and clean mashed banana off the carpets.
What if you had this?
Ta da. Rachel and Brad, I have three girls, all under the age of six. And that set up there is literally my house every day.
How much does it cost? $54.95. What does it cost you to make? Nine doll.
Wow. Your valuation, really being willing to kind of offer up very, very small piece is difficult. I believe in you guys. So I am going to make you an offer.
Oh, yeah.
So I will offer you all of the money, 300k. But I would need 9% of the business. What's your counter?
4% equity and 20% royalties until you make your investment back.
I'll do it for 5%.
Me too.
I mean, if they're doing 5%, I'll go up to 5%.
Robin and Dave, I think we're going to have to take your offer.
