Has Kevin Made A Bad Offer For TrueFit? | Shark Tank US | Shark Tank Global

True Fit Customs: Revolutionizing Mouthguards

Introduction to True Fit Customs

• Matthew, the founder from Ventura, California, introduces True Fit Customs, a company focused on making custom-fit mouthguards more accessible for athletes.

• Traditional mouthpieces are described as bulky and uncomfortable, often left behind by athletes due to their inconvenience.

Product Features and Technology

• True Fit uses advanced 3D printing and scanning technology to create mouthguards that fit individual dental profiles comfortably.

• The guards feature shockwave dampening pads and a slim profile that allows for better breathing and communication during games.

Market Positioning and Sales Performance

• Over 1,000 professional athletes across various leagues (NFL, NHL, PLL, NCA, UFC) currently use True Fit mouthpieces.

• Sales figures show growth from $115,000 in 2022 to an expected $1.4 million in 2024; however, valuation concerns arise regarding the company's worth at $15 million.

Valuation Concerns and Competition

• Discussion about the competitive landscape reveals skepticism about whether there is a significant market gap not already filled by existing companies.

• The cost of production is $31 per unit with a selling price of $95; customer acquisition costs (CAC) are noted at $23 with a healthy margin.

Investment Offers and Negotiations

• Sharks express concerns over the high valuation; Mr. Wonderful suggests it’s unrealistic based on current sales performance.

• An offer is made for $750,000 but requires reduced equity (3%) along with additional payments per unit sold until reaching a total of $2.25 million back.

Final Thoughts on Business Viability

• Kevin O'Leary emphasizes the need for lower CAC to improve profitability while expressing doubts about the high valuation without substantial proof of market capture.

• The discussion concludes with differing opinions on investment viability based on perceived risk versus potential reward in this niche market.

Investment Negotiations in a Startup Pitch

Understanding the Valuation and Offer Dynamics

• The speaker discusses the valuation of a startup, noting that while it may not have the growth rate or revenue of a "rocket," it possesses potential. The $15 million valuation is attributed to typical venture capital practices.

• Matthew has received an offer from Kevin for his custom mouth guard company, True Fit, which includes $750,000 for 3% equity and a royalty structure until he recoups $2 million.

Evaluating Deal Structures

• A warning is given against accepting a royalty deal, emphasizing that reinvesting funds into growth is more beneficial than focusing on immediate profitability. The speaker advocates for aggressive revenue growth instead.

• An alternative proposal is made: offering $750,000 in exchange for 10% equity and bringing in brand ambassadors as investors. This reflects a strategy focused on leveraging athlete endorsements to enhance brand visibility.

Counteroffers and Strategic Insights

• Matthew counters with an offer of $1 million for 8% equity; however, this is seen as moving in the wrong direction compared to previous offers based on the investor's track record with successful companies like Coinbase and Robinhood.

• The investor expresses confidence in their ability to help the startup succeed due to their history of successful investments, suggesting that involvement will lead to significant growth without additional burdens on operations.

Finalizing the Deal

• After evaluating multiple offers, Matthew expresses interest in working with Rashon. This indicates a preference for collaboration over competing offers, highlighting relationship dynamics within investment negotiations.

• The conversation concludes positively with congratulations exchanged between parties involved, indicating mutual agreement and excitement about future collaboration.