Despite getting their nerves in check and feeling well-prepared for their bout in on last night’s episode of Shark Tank, there was one thing entrepreneurs Laynton Allan and Adrian Rokman couldn’t get right: Janine Allis’ name.
Appearing first up in the tank, the two founders were seeking a $375,000 investment for 15% stake in KidsCo, their school holiday childcare program aimed at working parents. The pitch valued the company at $2.5 million.
Unlike other holiday programs, KidsCo aims to partner with corporations and businesses to run school holiday programs in-office, meaning kids can go with their parents to work and be educated and entertained during the day while their parents are working.
Facing the five sharks, Queensland entrepreneur Steve Baxter was first to chime in with a word of support for the two founders, saying he takes his daughter to one of their programs at his co-working space River City Labs.
But as the sharks began to drill down into the entrepreneurs’ numbers, some cracks began to show. At the time of the show’s filming, Allan and Rokman were running programs at 12 sites across nine companies, with another 15 companies taking part in pilot programs. In the last 12 months, the company’s revenue was around $600,000.
“So how did you come to a valuation of $2.5 million?” inquired Boost Juice founder Janine Allis.
“It’s based on our future projections,” said Rokman.
“So blue sky?” Allis shot back.
Looking beyond the numbers, the sharks also raised concerns about there only being two employees at the business: the founders themselves.
Both Allan and Rokman were managing all the sales of KidsCo across all states, making the sharks worry about the scalability of the business. But shark Andrew Banks cut the questioning short, and the sharks got down to business.
“There’s a lot to like about you guys, I think your energy’s infectious, and I think you’ve come across a business idea that is well needed in the workplace,” Allis told the founders.
“But it’s the valuation I can’t get my head around. I’m out.”
Not missing a beat, Allan said “thanks Naomi”, proceeding to cop flak from the sharks for mixing up the two female investors’ names.
Speaking to SmartCompany, Allan reveals the mix-up actually happened multiple times and he felt mortified because of it.
“It’s unlike me, I usually remember everyone’s name,” he says.
A complex deal secured
Despite the on-air flub, Allan and Rokman ended up accepting a deal with Greencross founder Glen Richards after significant back and forth negotiations, with the founders not keen to give up the 33.3% equity stake Richards was seeking.
In the end, the three shook hands on a somewhat complex deal, with Richards offering $300,000 with a $75,000 line of credit for a 25% stake in KidsCo and two free programs for Richards’ current corporate businesses.
The founders have since been working with Richards and his team over the past few months, which Allan says has been a “beautiful whirlwind”, although the deal itself is still yet to pass due diligence.
Allan says the two founders are focused on scaling the business with control to ensure they’re maintaining quality and have also started to work with the government to have KidsCo approved for the Child Care Benefit scheme.
KidsCo decided to enter the Shark Tank as a way to find not only investment but advice. Allan says the company had previously received investment offers of up to $500,000 for 15% equity but it was “dead money” — just finance with no advice or mentoring.
“Glen, aside from being a quintessential bloke, is an absolute role model. He and his team have been great and so proactive in helping us out, making sure everything is hunky dory,” he says.
“We would have loved to have two sharks on board with some different experience, but Glen and Steve were the sharks we wanted the most — Glen for his track record in scaling businesses.”
KidsCo is running 15 programs this school holiday period but predicts that number will be between 20 and 25 by September, with Allan saying the turnaround for approval from bigger companies can be “arduous” and take up to six months.
Business owners can’t have a “part-time ethic”
For other businesses, Allan says getting a mentor on board to help you through scaling and other tricky business processes is essential.
“Get a … man or woman at the table to help you through the process rather than learning the hard way. Listen to them and value their insights,” he says.
“Also, a part-time ethic gets part-time results. Adrian and I had six months of no pay and no customers, going at it 12 hours a day, six days a week, and the company would never have gotten off the ground if we didn’t.”