Rareform recycles otherwise wasted materials. They pitch Shark Tank on recovering billboard material. They intercept the billboards before they hit the landfill.
Rareform uses recycled billboard material
Rareform creates 1000 wallets, ten surfer bags, or one-hundred mini backpacks. They managed to get a Shark Tank billboard and develop products to give to the Sharks.
Rareform used billboards as roofing in South America and started making bags out of the vinyl.
They have contracts with Billboard companies that are exclusive, and they get the material for free. They save the billboard companies money, and it cost $200 to transport 1,000 billboards.
Their surfer bag costs $12 and retails for $80. A wallet costs $2 and sells for $12.50. The biggest problem is telling their story at the point of purchase.
Sales are $1.1 million in the first three years and generated $700,000 in the last twelve months. They manufactured in the USA and moved last month to Mexico and made $5,000 last month.
the founders invested $80,000 themselves and raised from family and friends in the amount of $200,000 giving out 30%. They did the second round at $2.5 million raising $150,000.
Entrepreneurs: Aric and Alec Avedissian
Ask: $300k for 10% equity
From: Venture County, California
Companies in this episode: The Sleep Styler, Blendtique Wine Company, MealEnders
Season: Season 8 Episode 819
Sharks: Mark Cuban, Barbara Corcoran, Kevin O'Leary, Lori Greiner, Robert Herjavec
First Aired: 04/08/2016
Deal: Kevin O'Leary at $300,000 debt 8% interest and 10% equity
What do the Shark Tank Investors say about Rareform
Barbara Corcoran thinks they sold off to much of the company. She is out.
Kevin O'Leary will offer them $300,000 for 36 months as debt at 8%, and they will have to give him 10% equity. They countered at $300,000 for 15% equity. He says no for straight equity. Kevin gets the deal.
Lori Greiner is impressed with the sales of $1.3 million, but there is never the same bag, so she can't get the bag if she likes it. She is out.
Robert Herjavec says if part of the deal is some license or a contract, you have a unique sustainable position, but not at a three million dollar valuation.
Rareform after Shark Tank
According to Forbes magazine, Alec and Aric negotiated their loan from Kevin to $150,000 for 5% equity after Shark Tank. They have tripled their sales after Shark Tank.
Rareform is now selling on Amazon. Find Bags, Totes, Wallets, and Backpacks.