“A little bit risky:” When Shark Tank investor Lori Greiner hesitated to invest in Gatsby

On Shark Tank Season 15's premiere episode, Ryan and Doug Bouton were seeking $500K for 5% of their chocolate business, Gatsby. During their pitch, the founders explained that they wanted to build a premium brand, which was the main reason behind the name. However, it didn't work out in their favor.

They made $2.5 million in sales, with the chocolate selling in retail for $3.99 and wholesale for $2.70. The founders shared that they didn't have any cash flow yet and had lost $3.5 million last year. Each chocolate bar costs $1.90 to make. Lori made an offer, stating:

"I really like it, I'll make you an offer. It is a little bit risky. I would do it as half as equity and half as a short-term loan. I'm going to be a nice loan shark."

Shark Tank investor Lori Greiner suggested rebranding Gatsby

After seeing the packaging, the Shark Tank investor Lori Greiner mentioned that the name Gatsby didn’t convey anything about the product itself. Lori initially thought it was a liquor-flavored chocolate and suggested the founders work on a rebrand. Greiner praised the product, the flavor, and the low-calorie aspect incorporated into the chocolate.

Guest Shark Candace Nelson agreed with Lori’s point of view and stated that the number of calories, prominently displayed on the front in a large font, might not be ideal. She pointed out that the product's target market consists of millennials and Gen Z consumers, who might see the packaging as promoting a "toxic diet culture." She encouraged them to partner with Shark Tank investor Lori to rebrand their product.

Lori explained that she was ready to give them an offer, including a loan, saying:

"But I will be in it to win it with you i will help you redesign this packaging i will be the voice I'm your demo and I love this."

Meanwhile, Kevin O'Leary implied that the valuation was too high. Though he praised the founders for their sales, he questioned the $10 million valuation. Mr. Wonderful said:

"So $500,000 for 5%, a $10 million valuation, sales are two million with no free cash flow. You see a problem with that? With all due respect, you guys have done an amazing job, this is Shark Tank I don't pay retail for anything."

The Gatsby founders explained that they wanted a celebrity to be the face of their rebrand, aiming to reduce marketing expenses. Upon hearing this, Lori said:

"I'm sorry I just don't put my face on anything. I'm very very selective about what I would do that with. A minute ago I was going to do that at 25 now I'm back to the original deal. I won't guarantee my face on any package because it's beyond this."

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Towards the end of the Shark Tank episode, Mark Cuban and Lori Greiner placed an offer of $250,000 for a 20% stake and a $250,000 loan at 6% interest. The equity would increase to 30% after sales hit $10 million and then to 40% when sales reached $50 million. This deal was accepted by the Gatsby founders.

New episodes of Shark Tank are available to stream on ABC.

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