This mother-son pair of entrepreneurs began their presentation by bringing a pack mule into the tank because that, they said, was what traveling with a baby is like. Except that most people don't have access to a mule so the parents end up filling that role. But BabyQuip, a new service founded in San Francisco, CA, hopes to change all of that with their online marketplace.
Through BabyQuip, customers can book rentals of carseats, cribs, high chairs, and toyboxes for the place they are going that will be there ahead of them and fulfilled by local providers. If this is sounding familiar, it's because it's essentially the same business as Kit Lender but with a focus on children's needs. But the idea is the same, to travel light and have what some one needs meet them at their destination. The entrepreneurs cite a typical use case for their service as being grandparents who need things for children ahead of a visit or, again like Kit Lender, people who are going to a vacation rental.
As an example, the entrepreneurs state that a double stroller might cost between $15 and $20 per day to rent. But that's just an example because BabyQuip, the entrepreneurs want to point out, doesn't actually provide anything themselves. Instead, it is marketplace where prices can be set to reflect local costs and demands. BabyQuip has over five hundred providers that meet the demands of the people renting through the platform, many of whom, it is claimed, are stay-at-home mothers. BabyQuip does take 24% of all sales made on their platform though, which impresses Kevin.
BabyQuip was founded in 2016 and has seen $3,700,000 in gross transactions through the platform since. Because they keep 24% of those transactions, this translates into a little under $1,000,000 in earnings.
The entrepreneurs are in the tank because they need money to continue to grow and want a shark to help them get to profitability within the next year. Their need of money is interesting considering that they raised $2,400,000 on a valuation of $8,000,000.
The entrepreneurs say that it costs them between $22 and $24 to acquire every customer and as much as $115 to acquire every provider, though the value of the latter, according to them, is in the "thousands."
The mother half of the entrepreneural team started Match.com and previously sold it for $8,000,000.
Robert states that he's worried that in order to make the business a success they will have to go national and will need corporate support and, because of what that entails, is out. Lori, on the other hand, is out because she still just doesn't understand the business.
Mark says that the entrepreneurs will experience the same issue as the ride sharing services have encountered with the Two Market Problem. Because of this, he thinks that BabyQuip will have to raise a lot more money in order to get to 100,000 transactions a month, have enough providers and customers and, for all of those reasons, is out.
Guest shark Katrina Lake says that she has issues with the deal. She sees that, if it works, there's a huge market where BabyQuip can take a small percentage but that 24% of a smaller market is too risky for her and she drops out.
Mr. Wonderful rides to the rescue of this pitch by saying that he's "way more valuable" than a standard venture capitalist and needs a 20% equity stake in exchange for the $500,000 the entrepreneurs are looking to raise. The entrepreneurs ask if Kevin would consider a convertible note so as not to dillute the existing shareholders but Kevin insists on straight equity.
The mother-half of the entrepreneurial team states that the maximum equity they can do is $500,000 or her own stake would be diluted to just 30% of the company under Kevin's terms. Because of this, ultimately, the entrepreneurs behind BabyQuip decline Kevin's offer and leave the tank without a deal.
Unfortunately for Mr. Wonderful, this is also the second time in one episode that entrepreneurs have declined to take any deal at all than the one he was offering!
- That BabyQuip is currently valued at $10,000,000 says that these entrepreneurs either are unwilling to give the sharks a discount on the company's last fundraising round or that they've priced in a shark's bite.