Pooch Paper Dog Waste Sheets
DEAL
EPISODE SUMMARY
🕓 Air Date: October 23, 2020
Asking For:
$250,000 for 12%
Investor:
Kevin O'Leary
Deal:
$250,000 for $1 royalty in perpetuity
PRODUCT SUMMARY
Pooch Paper is an eco-friendly and biodegradable alternative to plastic dog waste bags made from recycled paper, designed to reduce environmental impact while handling pet waste.
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Background Story
Tracy Rosensteel, a former Wall Street professional with 20 years of experience in trading floor technology, founded Pooch Paper. The idea for Pooch Paper arose from her desire to create a sustainable solution to the growing problem of plastic waste generated by dog owners. With an estimated 22 billion pounds of dog waste produced annually in the USA, Tracy saw an opportunity to offer a more eco-friendly alternative.
Pooch Paper is 100% compostable, 100% biodegradable, and manufactured in the USA using renewable energy. Tracy’s background in finance and her passion for environmental sustainability converged in this innovative product.
The Product
Pooch Paper is a 12×12 inch sheet of recycled, non-chlorine-bleached paper that provides a sustainable alternative to plastic dog waste bags. Users simply place the pet waste onto the Pooch Paper, twist the sides (which are grease-resistant), and dispose of it in the trash.
The paper is environmentally friendly, being both compostable and biodegradable. It comes in convenient packages, and for larger dogs, a 15×15 inch size is available.
It can be purchased online, and it has gained placement in various retail stores across the country. Additionally, Pooch Paper offers a 3×3 canvas pouch with a snap attachment for convenient carrying of the product while walking dogs.
How It Went
The company’s position before Shark Tank
Pooch Paper had been on the market for seven months at the time of the pitch, with sales totaling just under $50,000. The product had gained placement in 82 stores across the nation and was sold online. Additionally, Pooch Paper was on the brink of launching in 1,061 Target stores nationwide.
Tracy Rosensteel mentioned that the cost to produce one box of Pooch Paper was $3.66, which she wholesaled for $6.99. The retail price was $12.99, resulting in a healthy 48% margin. The company was well on its way to reach a projected $400,000 in sales by the end of the year.
Pooch Paper had been expanding its distribution and was building a presence in both physical stores and online, and this momentum was expected to continue with the Target launch. Funding primarily came from seeking an investment from the Sharks, and Tracy was in the fortunate position of retaining 100% equity while securing a royalty deal with Kevin O’Leary.
The Negotiations:
Tracy initially asked for $250,000 in exchange for 12% equity in Pooch Paper. Kevin O’Leary offered two options: $250,000 for 50% equity or a $1 royalty in perpetuity with no equity stake. The latter option aligned better with Tracy’s desire to protect her equity while still securing an investment.
After some discussion and negotiation, Tracy accepted Kevin’s royalty deal. The negotiation showcased Tracy’s understanding of cash flow and her willingness to explore creative funding structures while maintaining control of her company. Ultimately, Kevin’s offer provided the funding needed to grow Pooch Paper while preserving Tracy’s equity stake in the business.
