Velocity Signs
DEAL
EPISODE SUMMARY
🕓 Air Date: April 10, 2014
Asking For:
$225,000 for 15%
Investor:
Mark Cuban, Robert Herjavec, Kevin O'Leary (3)
Deal:
$225,000 for 30%
PRODUCT SUMMARY
Velocity Signs are portable, rechargeable, interchangeable, self-standing signs designed to attract attention with unique movement.
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Background Story
Velocity Signs, headquartered in Sacramento, California, was founded by Scott Adams and Josh Faherty, who shared a common vision of revolutionizing outdoor advertising. Scott Adams, with a background in marketing and entrepreneurship, brought years of experience in identifying market gaps and devising innovative solutions. Josh Faherty, with his expertise in product development and engineering, complemented Adams’ skills, making them a formidable duo in the startup landscape.
The genesis of Velocity Signs can be traced back to a sweltering day in Los Angeles, where Adams observed a sign-spinner laboring under the scorching sun. Witnessing the physical strain endured by the sign-spinner sparked a moment of empathy and inspiration for Adams. Reflecting on the inefficiency and hardships faced by traditional sign-spinners, Adams envisioned a more effective and sustainable solution. Pooling their expertise, Adams and Faherty embarked on a journey to conceptualize and develop Velocity Signs—a portable, rechargeable, and attention-grabbing advertising solution.
Their shared passion for innovation and desire to alleviate the challenges faced by businesses in attracting customers drove them to bring their vision to life. Through rigorous research, prototyping, and testing, Adams and Faherty refined their product, ensuring it met the needs of businesses while providing a user-friendly experience. Their dedication to quality and innovation culminated in the creation of Velocity Signs, poised to disrupt the outdoor advertising industry and provide businesses with a cost-effective and impactful advertising solution.
The Product
Velocity Signs are cutting-edge, portable advertising solutions designed to captivate audiences and drive foot traffic to businesses. These self-standing signs employ unique movement patterns, powered by rechargeable batteries, to grab attention effectively. With a robust construction weighing 165 pounds, Velocity Signs remain stable in various weather conditions, ensuring visibility and durability.
Businesses can purchase Velocity Signs in a range of models and sizes, accommodating diverse advertising needs and budgets. Prices start at $18.99 for basic models and range up to $2,850 for premium versions with enhanced features and customization options. Each Velocity Sign comes equipped with interchangeable graphics, allowing businesses to tailor their messaging to specific promotions or events.
The benefits of Velocity Signs are manifold. They offer a cost-effective alternative to traditional advertising methods like billboards or human sign-spinners, delivering a reported 15% return on investment for clients. Their portability and ease of use make them suitable for a wide range of businesses, from small local shops to large franchises.
Additionally, Velocity Signs reduce reliance on labor-intensive advertising methods, mitigating issues like turnover and fatigue associated with human sign- spinners. Velocity Signs can be purchased online through the company’s website or via direct sales channels. With their innovative design and proven effectiveness, Velocity Signs empower businesses to increase visibility, attract customers, and drive sales in today’s competitive marketplace.
How It Went
The company’s position before Shark Tank
Velocity Signs has shown promising performance in the outdoor advertising market, with steady sales and a growing client base. Their flagship client, Little Caesars, with over 3,560 locations globally, highlights the company’s ability to secure partnerships with major franchises. These partnerships demonstrate the scalability and appeal of Velocity Signs’ products to businesses of all sizes. Their clientele likely includes a diverse range of industries, from retail and hospitality to real estate and event management.
In terms of funding, Velocity Signs sought a $225,000 investment in exchange for a 15% equity stake in their business during their pitch on Shark Tank. Despite this setback, Velocity Signs remains determined to pursue growth and expansion opportunities, potentially seeking alternative funding sources such as venture capital or small business loans. The company reported sales of 125 units over the last 12 months, with prices ranging from $18.99 to $2,850 per unit, suggest a steady revenue stream. Their ability to deliver a 15% return on investment for clients like Little Caesars indicates a positive impact on their customers’ bottom line.
In terms of company structure, Velocity Signs appears to be a startup with a small team of founders and potentially additional staff members for sales and administration. Their focus on expanding their sales team and hiring administrative staff suggests plans for growth and scalability in the near future. Despite facing challenges and skepticism from some Sharks, Velocity Signs remains optimistic about its potential to disrupt the outdoor advertising industry and provide value to businesses worldwide.
The Negotiations:
During the negotiation process on Shark Tank, the founders of Velocity Signs, Brandon Adams and Mike Faherty, sought $225,000 in exchange for a 15% equity stake in their company. They presented their innovative portable traffic signs, which can be placed in various strategic locations to capture the attention of potential customers and help businesses promote their products and services.
The Sharks showed interest in the product’s potential, recognizing the unique benefits it offers in terms of advertising and traffic control. However, they also expressed concerns about the company’s valuation and market competition. Despite these reservations, three Sharks, Mark Cuban, Robert Herjavec, and Kevin O’Leary, decided to make a joint offer to the founders.
The trio of Sharks offered $225,000 for a 30% equity stake in the company, which was split evenly among them. This proposal provided the founders with the capital they needed while also giving them access to the combined expertise and resources of three seasoned investors. After considering the offer, Adams and Faherty agreed to accept the deal with Cuban, Herjavec, and O’Leary. This strategic partnership aimed to leverage the Sharks’ industry knowledge and networks to help Velocity Signs expand its reach and accelerate its growth in the market.
