Whether it is Uber, Airbnb or the dozens of other double sided market place businesses, there is no question that there is a huge trend toward this type of model. The problem that Liz wanted to solve was boring catering. Liz basically finds the best cafes and food outlets and connects them with businesses and other customers that want catering and takes 15% of the sale and it is free for customers. She has over 35 businesses onboard, a number that Steve had an issue with. Her explanation was a good one – she would rather 35 good clients than hundreds of average offerings and that she has a better chance of managing quality with a smaller group of businesses. I actually agree with her.
Valuing her business at $2.5 million is a big number considering her sales were only $56K over two years and still, she is not allowing for execution risk.
I thought what Steve offered was very reasonable and fair, so I was shocked when she was going to turn him down, I had to intervene on her making a mistake of not taking a deal. Thrilled she came to her senses. DEAL.
Tip: Understand that the journey of business is long, and getting the right partner is critical to success. Do not go in with a valuation that already values success, as you are not there yet.
Izzi is in year 9 at school and at only 14, was a very impressive young lady. Her product was great, fun and good quality. She knows the target market of tweens, because she is one.
I have decided that Andrew is in touch with his feminine side. So far this season he has tried red lipstick and now he is going for the green nail polish- amazing what you learn about your co-investors.
Since the show, Izzi has come into my office and I met with herself and her mum, and the business is going great guns. She has just signed Priceline (through a contact with one of the sharks) for her products and it is featured in every store, which is an incredible achievement.
These school holidays Izzi is coming into our head office for work experience. We may just keep her.
Tip: Age is not a barrier to success, whether you are 13 or 80. But focus is. If you want a successful business you need to give everything.
CPC – Loans to a property investment.
As you can tell with my reaction, this was not my favourite pitch to say the least. It was quite complicated, so let me give some more explanation of his business –
David wanted to raise money from sophisticated investors (technical term for investors that have significant wealth or assets), but he also wanted mum and dads’ money (probably from their superannuation fund) to add to this fund. The money raised would then be available to businesses as a loan for developing property. BUT, there was no security or protection for the investors, so if the person who borrows the money from the fund goes broke, then the bank gets their money and the fund would get nothing. This is called a Mezzanine deal and traditionally for the risk you get a higher return, normally between 14-20%. So for David to offer about 4% for the risk was a terrible deal.
We then found out that he does not have a licence, and that he did not have the experience behind him to be successful. Then to top it off, he wanted our reputation so that people would invest because we invested, and they trusted that we knew what we are doing!
It does frighten me that there are people out there who do not have the experience or license to offer these type of deals but are still doing so.
Tip: Take investing people’s money very seriously, do your homework, make sure you have the appropriate licenses and know what the market is doing. Do your research on anyone who was you to invest with them
Now this was such a cool product that blew my mind. The music was beautiful, I could have sat there all day and listened to what he was playing.
The size of the product was an issue as it was just focused on IPhone 6 compatibility, but there are so many different sized phones out there today. However, I was getting seriously impressed, then Steve starting talking about some of the issues around hardware, his comment that ‘HARDWARE IS HARD’ is not quite imbedded into my brain and Steve had a great idea in growing the software, which I think Joshua has taken on. The pitch went for about an hour and during that time Joshua also showed us another concept that he was pitching which was a 3D audio and video product which was very impressive.
Steve mentioned the GDC Expo, which is all about VR and AR (virtual reality) and the developments that are happening in this space.
I was thrilled that Joshua got a deal.
Great team with the creative in Joshua and the business man that is Andrew.
Tip: The best teams are the ones that have different skills. Do not hire yourself, hire your weaknesses.