Gunnar Optiks is a company from San Clemente, CA, that has created a new type of glasses aimed at reducing eye strain in people who have to stare at computer screens for hours each day.
The entrepreneur claim that Gunnar Optiks lenses relieve dry eye, eye muscle fatigue, reduces the glare from the screen, and counteracts the effects of the blue light that is emitted. The entrepreneurs claim say that their lenses can block "65% of blue light" that comes from a traditional monitor. Their lenses offer a promise of optical clarity and increased performance by the people who wear them.
Each pair of Gunnar Optiks glasses retails to customers at a price between $60 and $80. The entrepreneurs claim a 60% gross margin on those sales and predict finishing the current year at $7,500,000 in gross sales. The previous year they grossed $6,500,00 which was down substantially from the year prior to that in which they grossed $8,000,000. Three years before, the entrepreneur states that sales were "about the same."
After debt payment and taxes, the entrepreneur says the company brought in $500,000 the previous year.
In terms of fundraising, the entrepreneur capitalized on the fact that he formerly worked for Oakley and had two funding rounds totally $9,000,000 in capital raised but leaving the entrepreneur with only a 20% stake in the business. Additionally, the company had $1,200,000 in debt.
This deal aired on Episode 9.22.
Making A Deal
The entrepreneur stated that he was looking for a shark to invest so that he could attract and sponsor "athletes" of the professional gamer variety as gamers are a group that the entrepreneur sees as an important market segment. However, the entrepreneur also has big plans of expanding from this niche market and uttered the magic words "QVC" when explaining how he intended to take the product more mainstream.
The "Queen of QVC" herself, Lori Greiner, stepped up and offered a deal that was structured as a mix of equity and debt. She offered the $750,000 in capital the entrepreneur was looking for as a loan at 8% interest. But, in addition to a direct repayment, she also still wanted the 5% equity that the entrepreneur had originally offered.
Whether the entrepreneur saw value in her expertise with QVC or because of the debt desperately needed the cash, the entrepreneur accepted the deal and brought Lori on as an investor and creditor despite the slight reduction in valuation.
- The term the sharks used in the episode was EBITDA, an acronym meaning "Earnings Before Interest, Tax, Depreciation and Amortization".
- The Stats Shark has revalued this company at $14,250,000, subtracting the $750,000 from it's value as that's now equity the company can not sell to other investors. Whether this makes sense is debatable.