Amusement parks – especially the bumpeez cars are fun, right? But, going there, getting in line to purchase tickets, and then waiting again for your number, can be frustrating. And, all this for just two minutes of crashing into your buddies. Well, what is the fun in there?
Summary
- Asked for $100K for 10% equity in the company.
- World’s first patented inflated special character home bumper car.
- Secured deal from two sharks; Barbara and Robert for $100K for 15% + $5 royalty a unit until 50K units are sold.
- For Product Review Read This Bumpeez Car Product Review
Cost and Revenue Breakdown
| Metric | Value |
|---|---|
| Cost to Build (per unit) | $52 |
| Selling Price (per unit) | $149.99 |
| Profit per Unit | $97.99 |
| Total Sales (9 months) | $520K |
| Projected Sales Current year | $1M |
| Projected Sales Next year | $2.2M |
Getting Started
Michael Bergida and Israel Schaya came in hopping to the shark tank’s floor. Is it always me to do you also like guys who are full of energy? If I were to sum up the pitch here, I would say that it has been one of the cutest pitches of this season.
The idea behind this startup was fairly simple; if you don’t want to go to bumper cars, wait patiently for a two-minute ride, then buy this bumper car and make your home an amusement park.
A Little About the Product
I’ve been a big fan of bumper cars, no doubt about it, and this one seems different for weird reasons. First, it’s a small car, or should I say a seat turned into a car. And secondly, the inflated special character is something feast for kids eyes. Even before sitting in this car, seeing the inflated dinosaur would make them jolly.
The Serious Discussion
Okay, so Bumpeez, or should I say “Bumpeeeeez” (you know if you’ve watched this episode) came in with a pretty realistic evaluation of their start-up. They only demanded a mere $100K for a 10% share of their company.
However, it was way before they told how much they were earning from the startup. But first, let’s see how much cost they were bearing to make this product:
- It cost them $52 to build the bumpeez car from scratch. Mind that it is the landed cost.
- These guys sold this bumpeez car on Amazon for a whopping $149.99.
Now, let’s have a look at their financial projections:
| Total Sales | $520K (nine months) |
| Projection (Current Year) | $1M |
| Projection (Next Year) | $2.2M |
Also, Israel said that overall, they’re in profit with a few thousand dollars. But still, sharks did not understand why both the co-founders kept the valuation so low, and for that, read on.
The Valuation Woes?
Before I get on with this, keep in mind that these guys were not looking for the money. Instead, they were looking for patents and top-class licenses for their products. Hence, that is why to attract all the sharks who could help them with the patents and licenses, they valued the company so low.
Also, when Mark asked them whether they were marketing guys? Upon this, both, Michael and Israel said that they were the Amazon guys. Besides this store, they also run a pet brand on Amazon that is one of the top and biggest pet brands on the platform.
Sharks Battling It Out
Now, Mark Cuban was quick as lightning to say his mind. For him, the sales generated till now were not impressive at all and for him to make an investment in a toy brand, he said he would at least require $50 million in sales. So, he respectfully opted out to make an investment.
Then, it was Lori who backed out. Her philosophy was simple; she wouldn’t want a company with a single product, rather than multiple products.
From here on, the fun starts!
- Kevin offered a deal worth $100K for 30%
- Robert pitched in at $100K for 25%
- But, Barbara took the lead with $100K for 10% and matched their offer.
At this stage, after listening to all the sharks, it would have been ideal for them to take the deal. But Israel, for some reason tried to convince Lori to offer them a deal.
To be honest, it was quite frustrating for me as a viewer, let alone Barbara and Robert who were trying to convince them. More so, Barbara and Robert agreed to make an offer of $100K for 15%.
But, Barbara opted out as she felt ignored and offended. Soon, Robert backed out of his offer too, just because the entrepreneurs were fixated on Lori.
The Final Offer
To make things right, Israel apologized first and then placed an offer for Barbara and Robert, while taking the risk of ignoring Kevin, whose offer was still on the table. Israel proposed:
- $100K for 15% + $5 a unit in royalty until 50K units are sold.
Well, this offer was too good to be ignored and hence Robert and Barbara successfully got the deal.
| Shark | Deal Secured | Remarks |
| Robert | Yes | Loved the product and saw great potential. |
| Lori | No | A single product. |
| Kevin | No | Placed an offer but failed to secure the deal. |
| Mark | No | Believed that sales were too low to make an investment. |
| Barbara | Yes | Said that she could definitely help with patents and top licenses. |
So, What Do I Think?
The product is good, the guys are great, and the deal, naah! Let me tell you why everything was perfect, except for the deal, and as Mark said too.
Barbara agreed to match their proposed asked, right? Then, why do you want to go for more sharks for the same amount but offer more equity for your company? Doesn’t make sense, right?
And on top of that, you mishandled the deal first, and then to cover up for your mistake, you offered them a royalty, come on!
Realistic Estimated Net Worth Projection (2024 – 2029)
To make realistic assumptions, we need to factor in:
- Gradual growth instead of aggressive doubling every year.
- Increased expenses such as marketing, R&D, and logistics.
- Royalty payments ($5 per unit until 50,000 units are sold).
- Market competition, affecting pricing and sales.
- Scaling limitations, as manufacturing and distribution take time.
| Year | Projected Revenue | Estimated Net Profit (45%) | Cumulative Profit | Royalty Payments | Net Profit After Royalties | Estimated Valuation (4x Net Profit) |
|---|---|---|---|---|---|---|
| 2024 | $1,000,000 | $450,000 | $450,000 | $250,000 | $200,000 | $800,000 |
| 2025 | $2,200,000 | $990,000 | $1,440,000 | $0 (royalty paid off) | $990,000 | $3,960,000 |
| 2026 | $3,500,000 | $1,575,000 | $3,015,000 | $0 | $1,575,000 | $6,300,000 |
| 2027 | $5,000,000 | $2,250,000 | $5,265,000 | $0 | $2,250,000 | $9,000,000 |
| 2028 | $7,500,000 | $3,375,000 | $8,640,000 | $0 | $3,375,000 | $13,500,000 |
| 2029 | $10,000,000 | $4,500,000 | $13,140,000 | $0 | $4,500,000 | $18,000,000 |
