Although the offer was solid, Hot 30 Under 30 alumni and online mattress retailer Sleeping Duck turned down a $500,000 investment on last week’s episode of Shark Tank episode, with founders telling SmartCompany the business is “more than just a mattress company”.
Sleeping Duck founders Selvam Sinnappan and Winston Wijeyeratne were the final business to enter the tank in last week’s episode, seeking a $500,000 investment for 5% of their business, at valuation of $10 million.
The online mattress retailer, which featured in SmartCompany’s Hot 30 Under 30 list last year, is bucking the trend in the mattress industry by selling its products directly to consumers via an e-commerce store.
After a successful pitch in the tank, Sinnappan and Wijeyeratne fielded offers from investors Janine Allis, Andrew Banks, and Steve Baxter, but all were seeking a higher equity stake than the founders were comfortable offering.
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Despite being tempted by Steve’s offer of $500,000 for 15% of the company, the two left the tank empty handed.
Speaking to SmartCompany, Sinnappan said Sleeping Duck is currently seeking external investment and that was part of the motivation for going on Shark Tank. However, the added publicity was “a cherry on the top” for the mattress-sellers.
“We’ve seen some growth since the segment aired. We had a huge increase in traffic on the night, and sales have been up as well,” Sinnappan says.
“Businesses can get some serious exposure off a segment on prime time television.”
While it seemed that the significant equity offer from Baxter was the deal breaker for the two, Sinnappan says the real sticking point was their concerns about how the investor may approach the business, with the founders concerned he viewed the business as “just a mattress company”.
“For us, getting investment is about getting the right person on board and finding someone who buys into our vision, not just our business,” he says.
“We perceived that Steve saw us as just a mattress company and a prime takeover target for one of the major players, so there was quite a divide there, and in the end, we couldn’t bridge it.”
Sinnappan says the business has continued to grow since the Shark Tank segment was filmed last year, with the retailer seeing “strong half on half” growth over the last nine months and recently expanding into New Zealand and Hong Kong.
And while Sinnappan is sad a deal couldn’t be negotiated with the sharks in the end, he says the investors offered the founders plenty of constructive advice and positive feedback, which he says was great validation for the business.
Though the business’ valuation and desired investment amount may have seemed high, the Sleeping Duck co-founder believes significant investment is what’s required to “take it to the next level”.
The two are looking for that level of investment now, and Sinnappan says the Shark Tank experience will hold them in good stead in future pitches, given the unparalleled level of stress involved with pitching in the tank.
“We have talked to investors in the past but I think the Shark Tank environment with the lights and the cameras does add an extra level of stress to it. In the back of your mind, you’re not just pitching to investors, you’re pitching to a national audience of potential customers as well,” he says.
“It’s important to get those skills though, and going through the Shark Tank process made us better at it.”
For other keen entrepreneurs wanting to get better at the pitching process, Sinnappan says it’s all about “knowing your numbers and key metrics inside out”.
“You should know your business better than anyone else, and the investor will want to see that from you,” he says.
Also, be very clear on strategy and plan, and how you will execute them both.”