BabyQuip – Baby Equipment Rentals
NO DEAL
EPISODE SUMMARY
🕓 Air Date: March 6, 2020
Asking For:
$500,000 for 5%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
BabyQuip is an online rental platform connecting traveling families to local providers for renting clean, safe, and insured baby gear, eliminating the need for parents to carry excessive baggage while traveling.
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Background Story
Founded by Joe Maier, a serial entrepreneur with experience in startups, including Match.com, and advised by his mother Fran, BabyQuip was established in 2016. The inspiration came from the challenges faced by parents when traveling with children and the realization that existing solutions were inadequate. Joe, being an engineer, saw an opportunity to create a scalable business model, and Fran, passionate about the idea, joined as an integral part of the team.
Their unique approach involves leveraging independent local providers, often stay-at-home moms seeking a side hustle, to offer a marketplace for baby gear rentals. The business model aims to address the travel woes of parents while providing an income opportunity for local providers.
The Product
BabyQuip’s platform allows users to rent a variety of baby gear, including cribs, car seats, high chairs, and toy boxes. Providers set their own prices, and users can choose from a range of options based on their destination and travel dates.
The platform, acting as a marketplace, connects traveling families with local providers, making the process seamless. Providers deliver the selected gear directly to the user’s destination, eliminating the need for parents to carry bulky items during travel.
The revenue model involves BabyQuip taking a 24% commission from each transaction, allowing them to scale the business and expand into new markets. The company, driven by the belief in the value of its providers, emphasizes the importance of building a strong network of passionate individuals who contribute to the success of the platform.
How It Went
The company’s position before Shark Tank
Since its inception in mid-2016, BabyQuip has achieved $3.7 million in gross revenue, with the founders keeping about 24% of that. With a valuation of $8 million, the company has raised $2.4 million to date, and the founders sought an additional $500,000 to fuel further growth and achieve profitability. The business has attracted providers who are mostly stay-at-home moms seeking a side hustle, contributing to the company’s success.
While the customer acquisition cost is around $22 to $24, providers cost $115 to acquire, with their value extending into the thousands. The company’s data reveals that a significant portion of its business comes from private residences, especially grandparents, indicating a strong market segment. BabyQuip aims to use the additional funding to enhance awareness, continue growth, and reach profitability.
The Negotiations:
The Sharks were intrigued by the innovative business model but expressed concerns about the scalability and risk associated with the marketplace. The founders sought $500,000 for 5%, with a 24% commission from each transaction. Kevin was the only Shark interested and offered $500,000 for a 20% equity stake. The negotiations centered on the valuation and the dilution the founders were willing to accept.
Mark, Lori, and Robert opted out, expressing concerns about the challenges in scaling such a business. Lori emphasized the risks associated with the marketplace model, and Mark highlighted the potential difficulties in achieving national success without strong corporate partnerships. In the end, the founders stood their ground, unwilling to accept Kevin’s offer of 20%. Despite Kevin’s attempts to negotiate, the deal did not materialize, and the founders left the Tank without securing an investment.
