FunCakes Wedding Cake Rental
NO DEAL
EPISODE SUMMARY
đź•“ Air Date: October 10, 2014
Asking For:
$285,000 for 25%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
FunCakes offers unique wedding cakes made of foam, designed to look real, providing an affordable alternative for budget-conscious brides.
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Background Story
FunCakes, a wedding cake company founded by Kimberly Aya and her son Koray, has its roots in Grand Rapids, Michigan. The mother-son entrepreneurial duo embarked on this creative venture with a vision to bring affordability to the world of wedding cakes. Kimberly and Koray, both hailing from Grand Rapids, recognized the escalating costs associated with traditional wedding cakes—elaborate designs, intricate details, and sugar flowers that often led to exorbitant expenses for couples celebrating their special day. Kimberly Aya and Koray introduced an ingenious solution to this problem: FunCakes, a line of wedding cakes made entirely of foam.
The idea struck them as a cost-effective alternative, allowing couples on a budget to enjoy the grandeur of a beautiful wedding cake without breaking the bank. The concept involved cakes that looked real, adorned with genuine fondant and gum paste, providing the visual appeal of traditional confections. The inspiration for FunCakes came from the desire to preserve the tradition of wedding cakes while offering a practical and affordable option for couples. They aimed to make wedding cakes more accessible without compromising on the aesthetic aspect. The foam cakes, equipped with a concealed compartment for a small section of real cake, allowed couples to partake in the customary cake-cutting ceremony, feeding each other and capturing memorable moments—all at a fraction of the cost.
As they navigated the wedding industry, Kimberly and Koray faced challenges and skepticism, but their belief in the innovative concept drove them to persevere. Over the course of seven years, they garnered significant publicity, with global shipping as a distinctive feature. Despite encountering skepticism from the sharks on Shark Tank regarding the demand for fake cakes, Kimberly and Koray remained steadfast in their commitment to providing an affordable and unique alternative in the wedding cake market.
The Product
FunCakes presents a groundbreaking concept in the wedding cake industry with their innovative line of faux wedding cakes. Crafted entirely from foam, these cakes are designed to replicate the appearance of traditional wedding cakes without the hefty price tag. The intricate detailing, including real fondant and gum paste coverings, gives FunCakes a visually stunning and authentic look, making it an appealing choice for budget-conscious couples.
The functionality of FunCakes lies in its ability to facilitate the traditional cake-cutting ceremony. Each cake comes equipped with a concealed compartment in the back, allowing for the placement of a small section of real cake. This ingenious design ensures that couples can still engage in the customary cake-cutting ritual, feeding each other and capturing cherished moments, while the majority of the cake remains a cost-effective and reusable foam structure.
FunCakes can be rented, offering a practical solution for couples who desire an elegant wedding cake without the expense of a fully edible one. The rental process is streamlined—couples receive the foam cake, enjoy the ceremonial aspects, and return it post-celebration. The cost-effectiveness is evident in a comparison with traditional cake prices, with FunCakes providing an affordable alternative.
With a diverse inventory of about 150 different cake designs, FunCakes caters to various preferences and styles. Additionally, the company has expanded its reach by exploring partnerships with grocery stores, exemplified by the collaboration with Jewel-Osco in Chicago. This strategic move aims to make FunCakes more accessible to a broader audience, offering a unique and cost-efficient option for couples celebrating their special day.
How It Went
The company’s position before Shark Tank
FunCakes, after seven years in operation, provides a snapshot of its performance and position in the market. The company has achieved notable publicity, accumulating over $5 million in exposure. Despite this, their financial health has faced challenges, with reported sales of $150,000 in the most recent year and a gross profit of $76,000. The company acknowledges that the focus has been on building an idea and brand, with an emphasis on uniqueness and worldwide shipping. In terms of partnerships, FunCakes is in the process of collaborating with grocery stores, with Jewel-Osco in Chicago being a prominent example. This strategic move aims to increase accessibility and market reach by having the cakes available in retail spaces.
The partnership model involves the grocery stores carrying and selling FunCakes, complementing them with sheet cakes for a comprehensive wedding cake solution. FunCakes has not disclosed information about specific wholesalers, but their expansion into grocery stores indicates a diversification of distribution channels. The move to partner with Jewel-Osco aligns with reaching a broader customer base, making the innovative foam cakes more widely available. The customer base for FunCakes primarily consists of budget-conscious couples planning weddings.
The unique selling proposition of affordable yet visually authentic wedding cakes positions FunCakes as an attractive option for those looking to cut costs without compromising on the grandeur of their special day. While FunCakes reported a net income of $17,000 after seven years, the company’s structure and available capital remain undisclosed. The pitch indicated that the founders are willing to adapt and learn, demonstrating openness to change to improve the company’s financial standing and market presence.
The Negotiations:
The negotiations for FunCakes on Shark Tank showcased a mix of enthusiasm for the innovative product and skepticism about the company’s financial performance. The mother-son duo, Kimberly and Koray, entered the Tank seeking $285,000 in exchange for a 25% equity stake in their business. However, the sharks raised eyebrows at the valuation, given FunCakes reported sales of $150,000 in the most recent year and a gross profit of $76,000. As the founders presented their case, emphasizing the uniqueness of their foam wedding cakes and their strategic move to collaborate with grocery stores like Jewel-Osco, the sharks began expressing doubts about the demand for fake cakes in the wedding industry.
Kevin O’Leary, in particular, questioned the $285,000 valuation, stating it was high for a company with relatively modest annual sales. Barbara Corcoran expressed her personal aversion to fake cakes, opting out of the deal early in the negotiation. Mark Cuban and Lori Greiner both decided to exit the negotiation, citing concerns about the founders’ commitment and the company’s lackluster financial performance. Robert Herjavec delved into the financials, expressing skepticism about the company’s earnings and its position in the market. Kevin O’Leary continued to question the valuation, emphasizing that FunCakes was not an intellectual property (I.P.) company and lacked significant earnings.
Despite the founders’ efforts to highlight upcoming partnerships with grocery stores, the sharks collectively decided not to invest. Ultimately, FunCakes left the Tank without a deal, facing challenges to convince the sharks of the company’s long-term viability and market appeal, particularly in an industry driven by the emotional significance of traditional wedding cakes. The negotiation process underscored the importance of addressing financial concerns and market skepticism to secure investment in the highly competitive and emotional wedding industry.
