In my time when I was in school, there was little scope for conceptual learning. But now, school kids are learning to create their own electric skateboards, scooters, and whatnot! All with the help of STEM learning, which is further complemented by educational startups like Lectec.
Key Highlights
- Jared Ebersole and Luke St. Amand are co-founders of Lectec.
- The co-founders valued their company at $1M.
- Offered $100,000 for 10% equity in Lectec.
The Gap Lectec is Filling
It’s a reality that science subjects can get really boring, quickly. But, in no way we can underestimate the value of those subjects, as they’re essential for our kids’. So, how do we make sure that kids learn, what we want them to learn, but at the same time, don’t get tired and bored?
The answer is simple; with Lectec. This start-up is focused on providing hands-on experience for kids that makes learning fun and engaging.
A Little About the Product
Lectec creates and offers scientific kits and tools for kids to experiment on their own. In short, the product is focused on STEM learning and offers multiple tools for kids to use as they read about them in their scientific books.
The owners believe that with Lectec, kids can easily learn about:
- Gears
- Batteries
- Physics
- Engineering
- Coding
The Economics Behind Lectec
It is important to note here that Lectec is not selling its scientific kits to consumers. Instead, they are focused on selling their product to schools, after-school camps, summer camps, and similar educational institutes.
For a startup that does not have a seemingly wide target audience, generating sales of around $146,000 in the starting 10 months is a big deal. And, want to know something truly remarkable?
The cost of each unit sold is $349 and the cost to produce it stands at $149. A $200 profit margin, if I exclude other expenses, is unbelievable, right?
| Metric | Details |
| Retail Price | $349 per unit |
| Cost to Make | $149 per unit |
| Sales (Past Year) | $146,000 (10 months) |
| Primary Market | Education Institutes |
Shark’s Reviews
When I say that sharks can never be at the same stage, I mean it. This pitch is a perfect example of why I’m saying this. Starting with Lori, she did not only see this product as one to be distributed among the educational institutes. Rather, she wanted Lectec to step into the consumer market as it has the potential to grow there.
Since the startup had no intentions in the near future to target the consumer market, Lori took an early exit.
Barbara, as witty and straight-forward as she always is said “I cannot relate to the product and hence, I’m out”
Next up is Mark Cuban, who made a really good assessment (that’s what I believe). He said that he loved the product, the idea, and what this startup was trying to achieve. But, what he couldn’t understand was the scaling methodology.
For him, it’s vital to understand how would a business grow and if it doesn’t, it means an exit for him and that is what happened here. With Mark’s exit, only Robert and Kevin remained who both were deeply interested in the product and Lectec.
From here on, Robert and Kevin fought out to seal the deal. It started as:
- Robert liked the product and offered the same amount for 25%.
- Kevin made an offer at 10% but with a royalty model – $10 a unit perpetual royalty and full control over Lectec’s social media.
- Robert said – Kevin’s offer is a kiss of death.
- Jared countered Kevin’s offer – To end the perpetuity until you make your money back.
- Kevin first capped the royalty to a million dollars.
- Jared countered Robert’s offer and asked him to come down at 15%
- Robert dropped to 17.5%
- Kevin again dropped to $500K royalty, for 10%.
- Robert matched Jared’s offer and got the deal.
So, here’s a little recap:
Shark Deal Offered Remarks
| Shark | Deal Offered | Remarks |
| Lori | No | Wanted Lectec to explore the consumer market along with educational market. |
| Mark Cuban | No | Did not see any possibility of scaling the startup. |
| Barbara | No | Did not understand the product quite enough. |
| Kevin | Yes | Liked the product, offered a final deal of worth of $10 a unit until he make $500K in royalty for 10% of the company. |
| Robert | Yes | He was the first to offer the deal. Robert first offered 25% for the asked amount and then retracted to 17.5% and then to 15% to seal the deal. |
My Take on Lectec
If you ask me, I really love the idea and the product. Even though I somehow agree with Mark’s statement that scaling this product would be highly problematic only in the educational sector. The schools may purchase the product, but how would you ensure that those schools keep coming back to you?
You may have to compromise on the quality of your product, which Lectec will never do nor they would like to. And, that is where I think Lori starts to make more sense.
Opening this product for the general public instead of only kids studying at school would be great for this company. It’s because even as an adult, this product looks fascinating to me. And, if it’s in my budget, I would definitely give this as a Christmas gift to myself.
And, it’s not me alone who’s saying it. There are people who may also want to use these clever tools to create something incredible. Yes, it may change the product’s purpose of teaching something different to kids, but a sale is worth a sale, isn’t it?
So yes, overall it’s a great product with two energetic entrepreneurs leading from the front. And not to forget that they have a splendid $200 profit margin, which may sky-rocket their net worth in the coming years.
