The Sharks Question What Makes Must Love Stand Out From Its Competitors | Shark Tank US
Summary
TLDRIn a pitch to the Sharks, Hannah and Molly, best friends from Los Angeles, present their plant-based ice cream company, Must Love, seeking $600,000 for 75% equity. They offer healthier, indulgent treats free from cheap oils and artificial additives, with flavors like peanut butter swirl and cashew cookie. Despite growing sales, the company operates at a loss due to the cash-intensive nature of the food industry and aggressive marketing. Their products are available in Sprouts, select Whole Foods, and Costco, retailing for $5.99 with a cost of $1.80. The duo has self-invested $200,000 and raised $1.4 million from friends, family, and angels at a $14 million valuation. They face skepticism from the Sharks about their valuation and the competitive frozen dessert market, ultimately leaving without a deal.
Takeaways
- 🍦 Hannah and Molly are best friends from Los Angeles, California, seeking $600,000 for 75% equity in their company, Must Love.
- 🌱 They offer a healthier, plant-based alternative to traditional ice cream, using simple ingredients and avoiding cheap oils and artificial preservatives.
- 🍌 Must Love's products include dairy-free ice cream in pints with flavors like peanut butter swirl and cashew cookie, as well as novelty bars.
- 🎨 This summer, they launched plant-based, non-GMO sprinkles that pair well with their ice cream, with colors derived from plants.
- 📈 The company has been growing double year-over-year since its launch in 2017, with $1 million in sales year to date and a projected $1.7 million in revenue for the year.
- 💸 Despite the growth, Must Love is currently running at a loss of about $400,000, which they attribute to the cash-intensive nature of the food industry and marketing costs.
- 🛒 Must Love products are available nationally at Sprouts Farmers Market, certain regions of Whole Foods, and have recently launched in Costco.
- 💰 The ice cream retails for $5.99, with a cost of goods at $1.80, indicating a significant margin that could be attractive to investors.
- 🤝 The founders have invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angel investors at a $1.4 million valuation.
- 🦈 They are currently in a seed round with an $8 million valuation and are on Shark Tank to negotiate and potentially secure an investment.
- 🔄 Some 'sharks' expressed concerns about the high valuation and the company's current losses, ultimately deciding not to invest, while others highlighted the competitive nature of the industry.
Q & A
Who are Hannah and Molly and what are they seeking on the show?
-Hannah and Molly are best friends from Los Angeles, California, who are seeking $600,000 for 75% equity in their company, Must Love.
What is the main issue with the ingredients commonly found in ice cream according to Hannah and Molly?
-The main issue with common ice cream ingredients is that they often include cheap oils like canola and palm, artificial preservatives and flavors, and even ingredients derived from petroleum, wood pulp, and beetles.
What makes Must Love's ice cream different from traditional ice cream?
-Must Love's ice cream is different because it is plant-based, made with simple ingredients, and free from artificial additives. It is also marketed as being healthier and good for you.
What are some of the flavors and product types offered by Must Love?
-Must Love offers flavors such as peanut butter swirl, cashew cookie, and snickerdoodle dough in pints, as well as novelty bars like dipped crunchy peanut swirl and dipped vanilla.
How does Must Love ensure the vibrancy of their sprinkles without using artificial colors?
-Must Love ensures the vibrancy of their sprinkles by using plant-based, non-GMO ingredients, which also provide the vibrant colors.
What was the sales growth of Must Love from its launch in 2017 until the time of the pitch?
-Must Love had $355,000 in sales at launch in 2017 and has grown double year-over-year, reaching $1 million in sales by the time of the pitch.
What is the current financial status of Must Love in terms of profit and loss?
-At the time of the pitch, Must Love is running a loss of about $400,000.
What is the retail price and cost of goods for Must Love's products?
-Must Love's products typically retail for $5.99 on the shelf, and their cost of goods is $1.80.
How much investment have Hannah and Molly raised for Must Love prior to the show?
-Prior to the show, Hannah and Molly had invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angel investors.
What is the current valuation of Must Love and what stage of funding are they in?
-The current valuation of Must Love is $8 million, and they are in the seed round of funding.
What are some of the challenges faced by Must Love in the competitive frozen dessert market?
-Some challenges faced by Must Love include the cash-intensive nature of the food industry, the need for significant marketing to secure and maintain shelf space, and the competitive nature of the frozen dessert market, especially in the dairy-free and novelty segments.
Outlines
🍦 Pitching Must Love: A Healthier Ice Cream Alternative 🍦
Hannah and Molly, best friends from Los Angeles, California, introduce their company, Must Love, seeking $600,000 for 75% equity. They present a healthier, plant-based alternative to traditional ice cream, highlighting the undesirable ingredients commonly found in 'healthier' ice creams, such as cheap oils, artificial preservatives, and flavors. Their product line includes pints with flavors like peanut butter swirl and cashew cookie, as well as novelty bars. The base of their ice cream is simple, made from bananas or oats, sweetened with real fruit, and free from dairy and harmful additives. They've experienced significant growth since launching in 2017, with $1 million in sales year to date and a projection to reach $1.7 million by year's end. However, they are currently running at a loss of about $400,000, which they attribute to the cash-intensive nature of the food industry and the costs associated with marketing and securing shelf space in grocery stores. Their products are available in Sprouts Farmers Market, certain regions of Whole Foods, and have recently launched in Costco. The retail price is $5.99, with a cost of goods at $1.80. They have previously invested $200,000 of their own money and raised $1.4 million from friends, family, and angel investors.
💸 Negotiating the Shark Tank Valuation and Strategy 💸
The entrepreneurs are currently in a seed round with an $8 million valuation and are on Shark Tank to negotiate and potentially secure an investment. They acknowledge the show's history of deal negotiations and express their readiness to negotiate. However, they face immediate pushback from the sharks, who argue that their valuation is too high and that their ask of $600,000 is excessive. One shark shares a cautionary tale from a similar investment, where increasing sales margins were eroded by supermarket demands for promotions and marketing initiatives, ultimately leading to a low net margin and an exit from the investment. Another shark points out the lack of product differentiation in a crowded market of clean, natural, and wholesome products. A third shark declines due to a conflict of interest with an existing investment in a competing ice cream line. The final shark suggests that a lower ask for a smaller equity share might have been more successful, implying that the entrepreneurs may have overvalued their company and their potential contribution to a deal.
Mindmap
Keywords
💡Plant-based
💡Dairy-free
💡Indulgence
💡Equity
💡Shark Tank
💡Valuation
💡Revenue
💡Cost of Goods
💡Negotiation
💡Seed Round
Highlights
Hannah and Molly, best friends from Los Angeles, are seeking $600,000 for 75% equity in their company, Must Love.
Must Love offers a healthier, plant-based alternative to traditional ice cream with simple ingredients.
Their products are free from cheap oils, artificial preservatives, and flavors, focusing on health and indulgence.
Must Love's ice cream is made with a base of bananas or oats and sweetened with real fruit.
The company has experienced double year-over-year growth since its launch in 2017.
Must Love has a product line that includes pints and novelty bars with flavors like peanut butter swirl and Snicker doodle dough.
This summer, Must Love launched plant-based, non-GMO sprinkles that complement their ice cream.
The company's products are available nationally at Sprouts, Farmers Market, and in certain regions of Whole Foods, with a successful launch in Costco.
Must Love's products retail for $5.99, with a cost of goods at $1.80.
Hannah and Molly have invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angels.
The company is currently in a seed round with an $8 million valuation and is looking to raise funds on Shark Tank.
Must Love has a conservative projection of $1.7 million in revenue for the current year.
Despite the growth, the company is running at a loss of about $400,000 due to the cash-intensive nature of the food industry.
The brand has managed to secure and maintain shelf space in new stores, indicating strong market positioning.
The founders have a background in restaurant business and hold MBAs, with specialties in operations and marketing.
The negotiation on Shark Tank is expected, with the investors acknowledging the show's history of deal negotiations.
Some investors express concerns about the company's valuation and the competitive nature of the frozen dessert market.
A few investors decide to opt out due to personal experiences with similar businesses or concerns about product differentiation.
Mr. Wonderful suggests a lower equity ask for a smaller investment, indicating a potential strategy for the founders.
Transcripts
[Applause]
next up is a healthier version of a
favorite
[Music]
Indulgence hi sharks my name is Hannah
and I'm Molly we're best friends from
Los Angeles California and we're seeking
$600,000 for 75% equity in our company
must love look at this table of
ingredients over here they're cheap oils
like canola and palm and artificial
preservatives and flavors not to mention
monoglycerides di glycerides things I
don't even want to try glycerides and
you won't believe what these ingredients
are for medicine paint I Got It
Cosmetics
no it's ice cream gross right ice creams
marketed as better for you often have
unwanted ingredients even ingredients
made from petroleum wood pulp and even
beetles gross right that's why we
created a line of plantbased indulgent
treats made with simple ingredients must
love but must love is more than just
dairyfree ice cream it's simply good for
you fun that comes in pints like peanut
butter swirl or Molly's favorite cashew
cookie or Hannah's personal favorite
Snicker doodle dough and Novelty bars
like dipped crunchy peanut swirl or
dipped vanilla which tastes just like a
chocolate frozen banana but how do we do
it we start with a simple base of
bananas or oats and sweeten with real
fruit and from there we add in all the
Crave worthy stuff that you really want
in your ice cream but sharks we didn't
stop there this summer we launched
sprinkles they're plant-based non GMO
and go perfectly with our ice cream even
the vibrant colors come from plants must
love is bringing plant-based Indulgence
to your family's freezer pantry and more
so sharks who's ready to fall in love
with must
love so please dig into your samples and
I'd love to tell you about what you have
from our banana line we brought you our
signature dipped vanilla bars and also
our cashew cookie Pine which is about
the chocolate around it they're dipped
in chocolate but it's vegan there's Noir
vegan there's no Dairy e great it's very
good thank you banana eat yes you must
love bananas I thought it was going to
taste terrible it's pretty good Kevin
from you that means a lot thank
you I just want to say I'm not vegan at
all and I've eaten so much of this I
feel
sick this is really really scrumptious
thank you so much so um tell us about
you yes thank you um so we're actually
best friends who met in undergrad at
Berkeley we've been in restaurants for
15 years both our parents immigrated
here from Korea and are uh started their
own businesses really came here for
their American dream and after we both
got our mbas separately I was at MIT
you're an MBA from MIT yes what was your
specialy your focus um I focused on
operations and I focused on marketing
jeez so you're asking for 600,000 7
half% that's a pretty Punchy valuation
so I'm assuming now this is sold like
hot bananas we launched in 2017 we had
$355,000 in sales and since then we've
grown double year-over-year
year to date we've made $1 million this
year we're going to end this year 1.7 in
revenue and that's a very conservative
number what's your profit we're running
a loss at about $400,000 uhoh
wow okay so why do you you're running a
loss so the food industry um I'm sure
you're all aware you know it's a really
cash intensive business you know when
you get into a grocery store you need to
First pay for that marketing to be able
to be there and to reach those consumers
going the frozen section hard to
displace other products yes we've fought
too the nail for every position we've
been in and the the Frozen space is very
competitive where the growth has been is
dairyfree and novelties so that's really
our sweet spot of where we're hitting
and we have kept our Shelf space in all
the new doors what stores you in we
don't even know tell us tell us what
stores you're in what is it cost and
what does it cost for you to make it
we're available nationally at Sprouts
Farmers Market and as well as in in
certain regions of Whole Foods this year
we launched in Costco we tested with
them last year and it was wild
successful blew them out of the water
they retail for $5.99 on shelf typically
and our cost of goods is 180 so how much
money have you raised if any and from
who we both invested $200,000 of our own
money right off the B for you okay
you're serious we also raised in The
Last 5 Years
1.4 from a ser friends and family and
then angels and in valuation was the one
four raised that we're actually in a
seed round right now why we're here
we're here we're raising at um an $8
million valuation so this is part of the
seed round right now okay guys how could
you come on Shark Tank you you've
watched the show I I pres yes right
knowing every single deal in the history
of Shark Tank has been negotiated do you
not think you're going to have to
negotiate yeah we're ready to negotiate
and we've spoke with the other investors
who have participated in the seed round
and they're very excited for you guys to
be part so excited that they gave us the
exact offer that everybody else is going
to get well we're here to get to know
you you're here to get to know us no
you've known us for 13
years you know to come to us and offer
us the same that you're offering the
streets I mean at least show us the
respect of knowing where the value is
that we're going to bring I'm out thank
you we really appreciate the feedback
there's two problems you're not worth 8
million bucks you're also asking for
$600,000 part of your strategy on Shark
Tank you have to decide how much you're
asking for you're you're in the the top
quartile of ask it's too much for me I'm
out I just want to say I I've invested
in a business like this actually on
Dragon's Den it was exactly as you've
got here in essence so it was frozen
dessert what happened to that business
whilst the sales were going up but sadly
the margin reduced because as we got
into Whole Foods Costco and others and
all the supermarket they wanted to have
the product two for one they want to
have the specials they want to have the
end cap every single quarter another
marketing initiative when the brand then
started to actually go down we had to
invest more we ended up with less than 3
or 4% net margin every single year what
ended up happening was that the
manufacturer was making more money than
we were mhm and I got out I almost I
just got my money back so just because
of that of my experience I'm
out sorry guys the problem I have look
the products are good they're just not
differentiated enough I get that they're
clean natural wholesome ingredients yes
but there are multiple products and the
number of products that that meet that
criteria and check that box is growing
very quickly there's not that one
trigger that makes someone say okay I
have to try this and for that reason I'm
out thank you honestly I think we've
captured new customers with very small
listen let me tell you what I think okay
because I really know this space
actually because I did a deal a year ago
with frozen farmer and we created what
we call frobert which was a combination
of sorbet and ice cream you know
everybody up here at the time said oh my
God brutal space you're never going to
make it you remember that and it was no
actually he was wrong it was a hard road
but we're going to hit 20 million in
sales this year but you are so
competitive with my frozen farm and what
we're already doing that I would not be
being fair to her if I invested in
another ice cream line and so for that
reason I'm out we so appreciate that
thank you so much
Lord look thank
you for 200k it's a flyer I would have
tried it for 2 and half% no I would have
asked for 15% yeah they would have
laughed at you no they would have said
Mr Wonderful I'll do the deal and I'd be
up there right now just like that what
alternate universe would this Happ
there's only one Mr wonderful thank God
for that
Browse More Related Video
Nui Is STUCK Between The Deals Offered By The Sharks | Shark Tank US | Shark Tank Global
Shark Tank US | Fling Golf Is 'The Future Of Golf'
Top 3 Pitches That Were Offered $1M or More! | Shark Tank US | Shark Tank Global
Is The Pizza Cupcake BETTER Than Pizza? | Shark Tank US | Shark Tank Global
Are Zuum Tech Owners As Impressive As Their Product? | Shark Tank US | Shark Tank Global
The Sharks Can't Get Any Answers From Lockstraps Owner | Shark Tank US | Shark Tank Global
5.0 / 5 (0 votes)