Shark Tank India 3: Aman Gupta Critiques Pitchers' 12% Equity Deal With Sunny Leone, Hints At Failure

This season, the pitchers seem to be more experienced, not just about their businesses but about raising funds as well. In a recent episode, 21-year-old founders of an energy bar brand, Rize, left most of the sharks scratching their heads in confusion!

These pitchers sought Rs 45 lakh in exchange of 6 percent of their company, which brought their brand at a value of Rs 7.5 Cr. Surprisingly, their company was ¡®pre-revenue¡¯.

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Namita Thapar Questioned Their Company's Valuation, Founders Say It's Due To Sunny Leone

Pharma queen Namita Thapar's initial query revolved around how the company achieved a significant valuation despite being in the 'pre-revenue' stage. The founders explained then went on to reveal that they had already roped in Sunny Leone as not just their brand ambassador but as an investor too.

Engaging Sunny Leone as a brand ambassador not only significantly boosts their brand's value but also aligns with their distinctive selling point of including caffeine and taurine in their products. When asked about the equity allocated to Sunny Leone and her husband Daniel Weber, the entrepreneurs revealed, "We raised Rs 30 lakh at a valuation of Rs 2.5 crore."

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Namita struggled to grasp how they could envision increasing their valuation from Rs 2.5 crore to Rs 7.5 crore without having any tangible results or achievements to justify such a jump. She further reasoned with them saying,

¡°It¡¯s three times the valuation, within less than a month. Why? There has to be a logic to it. Either you have the sales to back it up, or you find a new distribution channel. There has to be something that justifies a three times valuation.¡±

She also added that the products were very expensive.

Aman Gupta Said That He Couldn¡¯t Find Anything Special In Their Products

Aman Gupta expressed his inability to identify anything particularly noteworthy in the products and sought clarity on whether his investment would be in the brand, the products, or the founders themselves. In response, the founders replied, "Us," and went on to elaborate. ¡°In four months, we turned our idea into a reality, got a celebrity brand ambassador on board, and now we¡¯re on Shark Tank.¡±

However, Aman wasn¡¯t convinced.

He said, ¡°Normally, diluting your company to this degree, this early, and that too for Rs 30 lakh feels a little raw. Don¡¯t you think you should¡¯ve worked at it more? Thodi si duniyadaari aa jaati. I don¡¯t see business sense in you¡­ I also started my first business at the age of 21. It failed. But I learned a lot from it. Your business will also fail, but you¡¯ll learn a lot. You are unfit right now, in my view. But this business will teach you how to be real players.¡±

Even though Aman didn¡¯t offer them a deal, he offered to mentor them as he felt highly impressed with the founders' enthusiasm. Ultimately, the founders left without securing a deal but received numerous compliments about their unwavering spirit.