So here’s how the deal went down for Stem Center USA on today’s show.
Early on, Mark Cuban, Kevin O’Leary and Robert Herjavec were out.
That left Lori Greiner and Chris Sacca (of Google fame) to duke it out.
Chris was the first one to bite. He saw this as a billion dollar business. His whole focus during the grilling was the exit strategy. He saw this business as a perfect buy out and he was salivating.
Chris offered $150K for a 25% stake. He wanted 10% more equity than the founders offered at the beginning. He saw risk and wanted to get compensated for it.
But this guy has an amazing track record making good on his promises.
Lori Greiner offers a sweeter deal at $150K for 20% of the business. She said “I’m a member of an elite group of people called women. I know there’s a bigger mission here and I want to help you develop your products and build this business.”
The deal got heated when Chris Sacca lowered his original equity stake from 25% to a 22.5% stake. By lowering his equity stake he effectively raised the company valuation from his first offer at $600K to $666.7K for the same $150K investment. Do you see it?
Lori Greiner, raised the bar by offering $200K for a 20% equity stake in the company. What Lori was doing was valuing the company at the same $1,000,000 that the founders believed the company was worth in their original bid.
$150K for a 15% stake values the company at $1,000,000
$200K for a 20% stake values the company also at $1,000,000.
Lori got the deal. Chris was peeved. It was a beautiful moment. The founders got their $1,000,000 valuation. They may have given away an additional 5% equity, but they caught a very big fish.
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