2. Shark Tank Pitch Chosen
Title- โRudeโ Entrepreneurs Try
Giving The Sharks the Haircut of a
Lifetime
YouTube Link- https://youtu.be/pswiybjs3GI
Reason-
โข Hugh and Richard initiated the pitch very well but they made a blunder midway.
โข The business idea was innovative, leading to multiple key learnings.
โข Their business model stood out and was well appreciated by the sharks.
3. About Nexus Notes
โข From the humble beginnings in 2011 in Adelaide, Nexus
Notes now connects students from universities across the
world, they started with notes, and are now expanding into
other areas where top students can continue to use their
education as a valuable resource to help other students
learn.
โข Unlocking this value produces great outcomes for all of the
users; authors create lucrative income streams and students
gain access to high-quality content that they learn from to
improve their grades.
4. Analyzing the key points in the Pitch
โข NEXUS NOTES is an online marketplace that allows students to buy and sell their course notes.
โข Nexus notes gives 50% of revenue to writer.
โข The founders of Nexus notes were asking Sharks to invest $300,000 for 7.5% equity.
โข Hugh and Richard were offering Sharks the business with a price tag which was 600% higher than
that of the one offered to another investors six month ago.
โข They revealed they had been accepted into leading accelerator program Startmate and had
already secured a 7.5% investment for $50,000.
โข Steve Baxter offered a $300,000 at Startmate valuation, but Hugh and Richard turned him down.
5. The Negotiations
Offer made by Hugh Minson and Richard Horden to the Sharks=
$300,000 for 7.5% stake
โข Sharks find this offer rude and unjust, as the founders have already
laid 15% (7.5% each) to a couple of angel investors for $50K each.
โข Hugh and Richard tried to defend their offer by telling the valuation
and other benefits (like connections) they got from the angel
investors.
โข The Sharks werenโt convinced by their reply and all 5 Sharks rejected
their offers.
Offer made by the shark- Steve Baxter to Hugh and Richard=
$300,000 on a $670,000 valuation, 60% (approx.) stake
โข Hugh and Richard rejected this offer.
6. Questions asked by the Sharks
โข What about the Downloader, because you are increasing the education burden on them
and their cost?
โข How does the universities viewing this business? Good or Bad?
โข How much you guys have invested of your own money?
โข Have you outsourced the building of this project?
โข What levels are there in your team? What is the shareholding structure?
โข What is it that you think they (angel investors) bring that we donโt to the due of 600%?
7. How pitch could have been better
โข The founders could have negotiated well and made the counter
offer that would have been convincing to the investors.
โข They could have offered higher % of the stake to the Sharks.
โข They should have pre-prepared a convincing answer and could have explained
the sharks how and why they agreed for 50K with 7.5% stake to the angel
investors.
โข Instead of being quite at the time when pitch went wrong, they should have
talked about the future growth prospective of the company.
8. Current Business Scenarios of Nexus Notes
โข Nexus notes is an online marketplace that allows students to
buy and sell their course notes.
โข Notes go on the site for sale at $35 per pop. The uploader get
half the sale price ($17.50) as commission. Nexus Notes
keeps the other half.
โข Based in Australia
โข Website: nexusnotes.com
โข Competitors:
Notesgen Inc StudeerSnel B.V. Studydrive GmbH Byju CL Educate Ltd Test Funda
10. Key Learnings
โข If you get what you ask for, take it: your innovation can be worth it but with an
investment of 50K expecting relatively high is never a good idea. Risk taking is not always worth it.
โข Ethics is everything: Ethics must be kept in mind while dealing with sharks, control on language
and gentle yet harsh approach is vital to getting a deal done.
โข Donโt drown in opportunity: Having a purpose and future is vital, respect for business and partners
is vital as well.
โข Prove your own hypothesis: One must value their own words and hypothesis must be well
understood and evaluated before turning it into a negotiation.
โข One must respect their investors. Itโs about trust, shared sense of purpose and the future.
