No Deal

Genius Juice


When people dress up as "sexy" Albert Einstein's and sing about coconuts... you're never quite sure what is coming your way. In this case, it's Genius Juice, a beverage company that promises that it's coconut "smoothies" contain a whole coconut in each bottle. This means that Genius Juice products don't just include the coconut milk but some of the meat of a coconut as well.

Genius Juice offers three flavors: original, turmeric, and coffee.[1] Despite featuring a full coconut's worth of... stuff...? Genius Juices are only 100 calories because they have no added sugars. Barbara compliments the flavor and Mark states that, once you expect a "smoothie" it's quite good.[2]

The entrepreneur states that the juices are sold between $4.99 and $5.99 at retail while costing only $1.87 per bottle to produce. He claims that his co-packer in Thailand sources the coconuts used at the peak of their freshness and that the co-packer extracts, blends, and bottles the product. It is pasteurized and frozen for shipment to the United States and defrosted before being sent to stores to ensure freshness.

The entrepreneur stated that Genius Juice is currently in 1,100 stores through two large distributors. In the previous year, the company saw $367,000 in sales. Being six-months into the current fiscal year, Genius Juice has booked $320,000 in sales and projects ending the year around $1,000,000. However, when asked how much profit the company expects to see on the current year's sales, the entrepreneur states that Genius Juice won't even be break even until seeing at least $2,250,000 in sales. For what it's worth, the entrepreneur states that the company projects making $6,000,000 in the next year.

Being Mr. Wonderful and because fish have to swim, birds have to fly, and Kevin O'Leary has to ask about value, he pushes on why the entrepreneur valued the business at over $3,500,000. The entrepreneur replies that he's flexible on the value.

It's stated that the money being asked from the sharks is intended to fund the business until a Series A round is raised. 65% of the money will be used for production while the rest will be spent on marketing.

In terms of total fundraising, thus far the company has seen $1,300,000 in investment. The entrepreneur personally put in $150,000. Between himself and family members, the entrepreneur controls 87% of the company's equity. The co-packer in Thailand is also an investor, having put in money on a convertible note valued at between 3% and 4% of the company's equity.

When asked if Genius Juice sees having to do more fundraising (presumably beyond the Series A) the entrepreneur says yes.

Making A Deal

Lori goes first, stating that she loves the look of the product and the flavor but that the beverage segment is too difficult and that she's out.

Guest shark Rohan Oza brings with him some deep knowledge of the beverage industry and says that he sees issues with the product needing refrigeration. He states that it takes a lot (more) work for those products and brands that require cooler space to scale and succeed and that it's much easier if a product is shelf-stable. Needless to say, he goes out.

Barbara asks if anything Rohan said scares him and, of course, the entrepreneur says no. Barbara then goes on to say that she's invested in three or four other beverage companies and that they've all "gone south" since because they ran out of money.[3] She also states that, while she swore she'd never invest in the beverage space again, she tempted by Genius Juice.

Stating that Genius Juice is the best coconut drink she's had and that it tastes more like 1,000 calories than 100, she offers $250,000 in exchange for 14% equity.

This offer scares Mark out of the deal after he says that he's interested in the business but that any offer he would have made would have asked for more.

Kevin says that he likes the product as well but that he's worried about being diluted as the business does additional fundraising. To compensate for that, he makes a very Mr. Wonderful like deal, $250,000 as a loan over thirty-six months at 9% interest plus 7% equity.[4]

The entrepreneur states that he's not interested in debt and counters Barbara, offering to make a deal for $250,000 in exchange for 11% equity.

Out of nowhere, Mark jumps back into the deal, teaming up with Barbara and offering $500,000 in exchange for 25% of the company. This reduces the value of the company to an even $2,000,000 but the entrepreneur accepts.

Scroll chart to see it all!

Scroll chart to see it all!

Notes

  1. Because your Stats Shark sometimes watches episodes in batches, he was reminded of Wanna Date?, the date based fruit product from the episode before this one where the entrepreneur there didn't have an original flavor and it became a condition of making a deal with Mark Cuban. It seems that if a business is going to use a unique natural product in their foods, the sharks would prefer if there's at least one version of it where the flavor of that product can shine through.
  2. One might infer from his statement that the product must be quite thick with the coconut meat being served in the bottle and that it could be off-putting if someone was expecting a more traditional coconut milk-only type drink.
  3. Based on our database of deals, we could only find two and then speculate whether they weren't Chill Soda from Season One and The Kombucha Shop from Season Ten.
  4. Essentially, Kevin is asking for the full deal terms the entrepreneur came in offering but that he would like it paid back with 9% interest within three years. This would seem a tough deal for any entrepreneur to accept unless they were in a temporary cash crunch and were absolutely positive that they could dig out in a very short amount of time. And, even then, they're still giving away part of the company for access to the loan.


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This page was last edited on 23 January 2020, at 09:38.