Entrepreneur Claims Little Saints Is Worth $10M! | Shark Tank US | Shark Tank Global

Summary

Megan Klein, founder of Little Saints, pitches her non-alcoholic cocktail company to the Sharks, seeking $500,000 for 5% equity. She shares her journey from being a lawyer to an entrepreneur, highlighting her innovative approach of using functional mushrooms to create low-calorie, alcohol-free drinks. Despite initial struggles, Megan's company has grown significantly, reaching $5 million in sales. The Sharks debate over valuation and terms, with offers of 10% equity and collaborative investment, but Megan ultimately declines, holding firm to her company's value and vision.

Takeaways

• 😀 Megan Klein from Miami, Florida, is seeking $500,000 for 5% of her company, Little Saints, which offers non-alcoholic cocktails and spirits.
• 😀 Little Saints is a healthier alternative to alcohol, using functional mushrooms like reishi and lion's mane to create sophisticated non-alcoholic drinks.
• 😀 The company is focused on providing low-calorie, sugar-free beverages with a functional benefit, appealing to those who want to enjoy a cocktail without the negative side effects of alcohol.
• 😀 Megan shared her background as a lawyer and entrepreneur, having previously run a hydroponic basil farm and a plant-based food brand before starting Little Saints.
• 😀 Little Saints raised $2.2 million in outside capital, with a company valuation of $6 million and has grown 600% since October 2023.
• 😀 In the past 12 months, Little Saints achieved $5 million in sales, with an ongoing monthly burn rate of $30,000.
• 😀 Megan revealed that her best-selling product is the bottled spirit, which retails for $49.99 and costs $23 to produce (including shipping and fulfillment).
• 😀 The company’s Customer Acquisition Cost (CAC) is $42, while the Return on Advertising Spend (ROAS) is above 2.5, and the Lifetime Value (LTV) of a customer is approximately $160.
• 😀 Despite facing challenges in 2022, where the company lost $1.1 million, Megan's company showed significant improvement in 2024, with just a $160,000 loss.
• 😀 The sharks were impressed with Megan’s resilience, but her valuation of $10 million was met with pushback, leading to negotiations that ultimately resulted in a rejected offer for 10% equity.

Q & A

What is Little Saints, and what is its main selling point?

Little Saints is a company that offers non-alcoholic cocktails and spirits powered by functional mushrooms. Its main selling point is that it allows people to enjoy socializing and drinking without the negative effects of alcohol, providing drinks that are sugar-free, low-calorie, and made with mushrooms like reishi and lion's mane for additional functional benefits.

How did Megan Klein transition from a lawyer to an entrepreneur?

Megan Klein transitioned from being a lawyer to an entrepreneur by pursuing her dream after practicing law in New York. She had a passion for healthy living and started with a hydroponic basil farm before launching a plant-based salad dressing and dip brand. Her entrepreneurial spirit led her to start Little Saints.

What led Megan to create Little Saints?

Megan created Little Saints because she was looking for a better alternative to alcohol. After realizing that drinking alcohol made her feel terrible, she wanted a drink that allowed her to have fun without the negative side effects. The functional mushrooms in Little Saints' drinks provided that balance.

What makes the functional mushrooms in Little Saints drinks special?

The functional mushrooms used in Little Saints drinks, such as reishi and lion's mane, are non-psychedelic but offer medicinal benefits. These mushrooms help with relaxation and mental clarity, providing consumers with a way to 'take the edge off' without the intoxicating effects of alcohol.

How has Little Saints performed financially?

Little Saints had a rocky start in 2022, losing $1.1 million in sales while only making $500,000. However, the company grew significantly in 2023, increasing sales by 600%, reaching $5 million in the past 12 months. Their losses also decreased, amounting to around $160,000.

What is the cost structure of Little Saints' best-selling bottled spirit?

Little Saints' best-selling bottled spirit sells for $49.99. The production cost is $7, and after accounting for shipping, fulfillment, and packaging costs, the total cost per unit comes to $23.

What is Little Saints' Customer Acquisition Cost (CAC) and Return on Ad Spend (ROAS)?

Little Saints has a Customer Acquisition Cost (CAC) of $42. Their Return on Ad Spend (ROAS) is above 2.5 for the year, indicating a strong return for the marketing investment they make in acquiring customers.

What offer did the sharks make, and how did Megan respond?

Rashawn offered Megan $500,000 for 10% of Little Saints, but Megan countered with a request for the same amount for only 5% of her company, along with access to a $2 million line of credit. After some negotiations, the sharks proposed a deal where they would both invest for 15%, but Megan ultimately declined all offers.

Why did some sharks choose to back out of the deal?

Some sharks backed out because they were not passionate about the product or the category. Lori, for instance, was unable to participate in the drinks due to her dietary restrictions. Mark and Kevin also expressed concerns about the valuation and market entry barriers, making them hesitant to invest.

What was Megan's final decision regarding the offers from the sharks?

Megan ultimately decided to decline all the offers. She wanted to retain the value of her company and felt that accepting the offers would not align with her vision or the hard work her team had put into growing the business.