In the 16th episode of Shark Tank season 16, I’m going to present you with a company whose sole focus is to provide you with cleaner air in the place that you spend most time in – your bed.
Pitch Highlights
- Arjen De Jong came to the shark tank to seek $400K for 4% of his company – AirTulip
- AirTulip was in the initial stages, and as of yet, they were still looking for their first sale. However, the product is pretty decent and to know more about it, click here.
- Even though Kevin offered a deal, Dr. Arjen did not want to give away so much equity and hence, the deal fell apart.
What Problem Did It Solve?
It’s a reality that we live in a polluted world. Wherever we go, we can easily find dust, smoke, bad air, allergens, and whatnot, everything around us is polluted. And, while most people may think that air purifiers are the ultimate hack to clean the air that we breathe in, it’s not! Yes, it’s not the ultimate solution for our breathing problems.
Air purifiers can only marginally improve the air quality that we breathe in. And, they cannot work against dust particles as well. On the other hand, we can’t really do something about it. Only if we are living in a medical or industrial clean room, are we sure to get the best possible clean air we hope for.
What Did Dr. Arjen Propose?
Coming to the primary point, Dr. Arjen De Jong proposed a bed head, an electronic device that is placed exactly where your head rests in the bed. This device creates a bubble for uncontaminated air and layers that protect you from the contaminated dust and other particles harmful to your health.
Think of this device as the personal clean and green zone around your bed. The headboard is whisper quiet and you won’t feel the clear air whistling past your head. Furthermore, the air this headboard offers is said to be 1,000 times cleaner than what an air purifier offers.
Moreover, the device can remove particles that cause asthma or other common allergy triggers that you don’t want to hover around your bed at night.
Last but not least, this device has passed all the industrial-grade HEPA filter standards as well.
Crunching Down the Numbers
Dr. Arjen said that the device cost $3K to buy, and the landed price to create is around $1,500. Well, that is a straight 50% margin on a high-cost product. Till now, Dr. Arjen admitted that he had raised around $200K from crowdfunding and invested $300K from his own pocket. Moreover, he took $100K from an angel investor and $100K from a venture capitalist as well.
However, the most surprising thing about AirTulip was that it was yet to make sales. Dr. Arjen had no marketing strategy and wasn’t even sure who his primary target market and customers were. All these factors were quite astonishing, given the fact that Dr. Arjen’s company, AirTulip had a net worth of $10M.
Kevin’s Dilemma and Dr. Arjen’s Rejection
First up was Mark Cuban who in all fury said that the returns on such an investment would take an eternity and for that reason, he opted not to invest in the business. Then, Robert also explained that there was a very tough road to the consumer market and hence he opted out as well.
Then came Barbara, who said that the product she is seeing is very expensive and very hard to sell as well and hence, she wouldn’t invest in the business. Then, Lori just said that Dr. Arjen had been too early for her and she wouldn’t want to invest in this business.
In the end, Kevin said that he would invest in the company for 22.5% to which, he was countered at 8%. Kevin came down to 20% and then again, Dr. Arjen said that 15% was the highest he could go to which Kevin nodded in a no. Hence, Dr. Arjen thanked Kevin for his offer but he respectfully declined it.
The Financial Assumptions
As AirTulip has not made any sales yet, I wouldn’t be able to generate any analysis but here is some assumptions that we can do.
Interpretation:
- Gross profits could reach ~$60M by the end of 2030, assuming steady growth and no major pricing or production cost changes.
- By 2027, AirTulip could cross the $1M profit mark.
- By 2029, with 10,000 units sold globally, AirTulip becomes a $30M+ revenue company.
