Season 7 of "Shark Tank" sees Ann Crady Weiss and her husband Dave shoot their shot with the celebrity investors, seeking a $250,000 investment for 2.5% of Hatch Baby. However, whereas many entrepreneurs would stand strong on the $10 million valuation, the Hatch Baby team has another trick up their sleeves.
The investors grow weary upon learning the company is still in the pre-revenue stage, but Ann assures them that their vast experience in the space adds to their value. They reached the valuation after raising $1.7 million from prior investors as a convertible note, meaning the money was given as a loan but can be converted into an equity stake. A single unit costs $89 to produce and is planned to be priced at $299, which worries the sharks. Ann reminds them that items such as baby strollers go for $500 on average and that parents are more than willing to drop such an amount for their babies. They project sales of $6 million once they officially launch, which the sharks find wildly optimistic.
At first, all the investors go out, believing there is too much competition and the price will drive parents away. While this would normally indicate the end of a "Shark Tank" deal, Ann has another proposition. They still have $250,000 left on their convertible note and offer to bring a shark on that note under the same terms as those who invested during its development phase. Chris Sacca likes the new structure and takes the deal, which equates to $250,000 for 25% equity.
