“Does not add up to me:” When Shark Tank investor Mark Cuban backed out from placing an offer to Cabinet Health founders

On Shark Tank Season 14 Episode 11, Russell Gong and Achal Patel sought $500k for a 2.5% equity for Cabinet Health. During their pitch, they explained that their company's main goal was to reduce plastic waste in the healthcare industry and Cabinet Health provided an alternative to refillable bottles.

Kevin questioned the $20 million valuation, then the founders clarified that they had made $14 million in 2022 and had predicted $25 million in revenue for 2023. They explained that most of their fund was going into research.

Mark Cuban was unsure of the overall business process and wasn't satisfied with the answers. He said:

"Guys, I'll clear the deck. I appreciate what you're trying to do on sustainability, but a lot of what you're doing does not add up to me it's just not to fit for me. I appreciate what you're doing, but for those reasons, I'm out."

Cabinet Health founders secured a deal with Shark Tank investors Kevin O'Leary and Tony Xu

Shark Tank investor, Mark Cuban, was the first shark to back out from placing an offer to Cabinet Health founders. He appreciated their efforts to promote sustainability and incorporate it into their business; however, he was unsure as to what the research was for. When the founders stated that the majority of their amount was being spent on research, Cuban questioned the process. He asked:

"You've got your sustainable packaging, you're using OEM medications, and you're not investing in any medications that are going to go through FDA approval. You have to get FDA approval for different packaging every time you release?"

Russell Gong and Achal Patel clarified that they had to get FDA approval each time their product was made. Kevin O'Leary, on the other hand, praised the founders and stated he was a believer in the "power of sustainability." Mr. Wonderful continued:

"I believe in the power of sustainability being a motivator for consumers. I've seen it happen, but I can't do this deal because your valuation is insane."

The Shark Tank investor expressed interest in the business and placed an offer. Additionally, the guest shark, Tony Xu, placed a separate offer. Then, the founders asked if Kevin and Tony would be interested in placing a combined offer and asked Lori Greiner to join the two sharks as well.

Despite being impressed by the business, Lori Griener decided to back out because of the valuation. She praised the founders by stating they had established something "really brilliant" and wished them the best in their company's future. Greiner said:

"I think what you have is really brilliant. You can get rid of so many plastic bottles; you did a beautiful job of it, but I think the valuation is out of this world. I hate it. I wish you guys both good luck."

After multiple negotiations, Russell Gong and Achal Patel agreed to $500,000 in exchange for 7% equity and a 2% royalty until $1 million was repaid to Sharks, Kevin and Tony.

Trending

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

×

Was this article helpful?

Thank You for feedback