Drainwig is a company from Salem, UT, that makes a drain clog preventer. The product is a steel chain that hangs inside the drain and captures hair that falls in. By reeling it back out by the chain, the source of most clogs can be easily removed.
The entrepreneur was inspired to create the Drawinwig after finding a piece of dental floss caught in a drain that had captured hair.
Drainwig is sold in 2-packs, each of which costs $1.2 per pack and sells for $9.99 retail. The product is sold in Walmart and Bed, Bath, and Beyond. Additionally, the Drainwig has had an infomercial on which the company made $800,000 in royalties. In total, the company has sold $14,200,000 in product but it is strongly implied that the vast majority of that is through the infomercial and at a much lower margin than traditional means.
The infomercial was signed with a five year contract initially with three years left on its term but the entrepreneur wants money from the shark to purchase an early exit to bring in more profit from the product.
In terms of previous investment, the company had an angel investor the entrepreneur bought out for $300,000.
This deal aired on Episode 9.06.
Making A Deal
There was quite a feeding frenzy involved with Drainwig and the company received three offers for 20% or more. However, when the entrepreneur mentioned that he saw hotels as the biggest market, Mr. Wonderful lowered his offer to 15% and the entrepreneur accepted.
By accepting a deal for three times the amount of equity the entrepreneur original offered, the bite on this deal was $4,000,000 off the original $6,000,000 valuation. However, this dip might be temporary if the deal with Mr. Wonderful allows the entrepreneur to break the infomercial contract and increase the margins from sales there as well as possibly breaking into the hotel market.