Quickflip is an apparel company that makes a sweatshirt that can be easily removed and stowed when the wearer gets warm or the sun comes out to play. The sweatshirt inverts and turns into a backpack that can be worn across the shoulders and... in an interesting twist, actually be used for storage. The sweatshirt can convert from wearable to bag and bag to wearable again in about a second and the straps for the bag transformation can even be adjusted for height.
The entrepreneur was inspired to create the Quickflip sweatshirt when out one day and after he took off his hoodie and had no where to put it.
The Quickflip costs $13-15 per unit to manufacture and is sold for between $40 and $50 per item direct to consumer online.
As a test, Quickflip sold 5,000 units as a test and brought in $200,000 in sales. The top two SKUs sold out in sixty days. Following this, the entrepreneur created convertible crewnecks, a kids variation, and a rain slicker, all of which also turn into a bag. All told, Quickflip has generated $577,000 in sales with $220,000 in profit. He projects earning $1,200,000 by the end of the current year and projects having $5,500,000 in sales the following year.
The entrepreneur says Quickflip is protected by two utility and two design patents that are pending but Daymond said that he has fifty patents that he can't afford to protect.
Quickflip is looking for investment because the entrepreneur is having a hard time keeping up with inventory demands.
Making A Deal
Mark is the first to exit the deal stating that, while a neat idea, he'd just bring a backpack along with him. Daymond follows Mark out, stating that people can't easily tell what it can do if it were sitting on a shelf in a retail store.
Kevin, as usual, takes issue with the value, stating that the entrepreneur is looking for a 20x multiple on his sales and, because of that, is out.
Kevin jumps back into the deal and offers $100,000 in cash and $400,000 in credit for 25% of the company. But the entrepreneur states that he doesn't like the deal because he's making money (and, come on, Kevin's deal is kind of mercenary).
Lori says that she has to do what's right for herself and offers $500,000 for 15% of the business but makes this contingent on actually getting a patent.
Robert finally makes an offer as well, matching Kevin at 25% of the business but the $500,000 sounding as if it were a straight cash for equity deal. This forces Kevin to revise his offer down to 15% equity but without any contingencies as in Lori's offer.
The entrepreneur then counters all of the sharks as $250,000 in cash and $250,000 in credit in exchange for 10% of the business and Lori jumps to accept the deal. When he asks whether Lori might accept another shark as a partner, she declines and the deal is sealed.
Because of the way we value deals on the Shark Tank, that 10% of the business is valued only against the cash portion of the deal, meaning that Lori bit a massive $7,500,000 off the original valuation of $10,000,000. And, while $10,000,000 may have been a little high for a company that was only projecting $1,200,000 in sales for the year (thank you, Mr. Wonderful), taking three quarters of the value is also a little steep. But, the entrepreneur felt comfortable making it and we look forward to updates in the future.