The second entrepreneurs into the Shark Tank this week were presenting their business Enso Rings and seeking $500k in exchange for 7.5% of the business. They have developed a line of stylish silicone rings that are meant to protect you from becoming one of the 150k people every year that experience ring avulsion.
Ring Avulsion “...occurs when the skin is torn around the finger due, in most cases, to the ring getting caught on something with an edge or on a moving piece of machinery. Injuries can range from the skin being torn to the finger being completely ripped off.” - The Baltimore Sun
As for their numbers, they retail between $11.99 - $39.99 and cost $0.07 - $4.00 to make. The saw $3.8M in sales in the first 18 months and are on track to do $5M in sales this year. Just last month they saw $460k in sales, but had a 40% marketing cost to get to those numbers.
Something that I was happy about in this presentation was their mention of Jimmy Fallon. The second they walked into the Tank, I was hoping they would bring him up. His run-in with ring avulsion gives so much visibility to this problem. That’s the kind of marketing you simply can’t buy. It was an excellent idea to include him as an example in their presentation.
When it comes to the Shark’s reactions, I can identify with Mark’s comment about them being a marketing company with a product. Due to their high marketing cost this does seem to be the case, but that is not necessarily a bad thing. As long as the company is making money a high marketing cost is not the end of the world, but it is something that causes investors to be weary and concerned about the return on their investment.
Despite this, they did end up getting a deal with Robert for $500k in exchange for 15% of the business. This does cut their valuation in half, but I understand Robert’s desire to secure more equity in this case. He needs a piece of the pie that’s big enough to see a return in a timely manner, especially considering their overall margins.