Boost Oxygen – Portable Oxygen
DEAL
EPISODE SUMMARY
🕓 Air Date: October 6, 2019
Asking For:
$1,000,000 for 5%
Investor:
Kevin O'Leary
Deal:
$1,000,000 for %
PRODUCT SUMMARY
Boost Oxygen provides affordable and portable aluminum canisters containing 95% pure aviator's breathing oxygen, aiming to make compressed oxygen as accessible as bottled water for health and wellness.
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Background Story
Boost Oxygen, founded by CEO Rob Neuner and COO Mike Grice, emerged from the recognition of the essential role oxygen plays in heart, brain, and muscle function. Observing the use of supplemental oxygen in various fields such as professional sports, aviation, and mountaineering, the founders envisioned making compressed oxygen as accessible as bottled water.
The product originated from the intuitive need for oxygen at high altitudes and during strenuous activities, leading to the creation of a natural and affordable solution. The founders share a mission to enhance the quality of life and performance for millions of people by popularizing the use of Boost Oxygen.
The Product
Boost Oxygen provides a convenient solution for individuals seeking additional oxygen for health and wellness purposes. The product is presented in portable aluminum canisters, containing 95% pure aviator’s breathing oxygen. Not classified as a medical device, Boost Oxygen is an all-natural product designed to enhance performance and improve the quality of life.
The canisters are easily used by placing the mask under the nose and over the mouth, then inhaling for a few seconds. The company positions itself as an accessible alternative to traditional supplemental oxygen use, with a mission to make compressed oxygen as readily available as bottled water.
The product is priced at $14.99, $9.99, and $7.99 for different sizes, offering 200 inhalations per canister. While not FDA-approved as a drug, Boost Oxygen is presented as a wellness product with a broad market appeal.
How It Went
The company’s position before Shark Tank
Boost Oxygen has demonstrated strong financial performance, with projected sales for the current year reaching $6.4 million and a net income of $705,000 in 2018. The founders assert that the company is profitable, expecting to generate $1.5 million in the current year. With a focus on retail, Boost Oxygen currently works with brokers, distributors, and retailers. The founders expressed a desire to expand the staff and gain greater control over the sales force.
The product has found success in the market, with a claimed 95% market share in the United States. Boost Oxygen’s target customers include individuals at high altitudes, athletes, and anyone experiencing situations where increased oxygen intake could be beneficial. The product’s impulse purchase nature is considered a key market advantage, catering to immediate needs during activities like skiing or exercise.
The Negotiations:
The negotiation process involved the Sharks expressing initial skepticism but being intrigued by the company’s impressive market share and financial performance. The founders sought a $1 million investment for a 5% equity stake, prompting Kevin O’Leary to counter with a $1 million loan at 9% interest and 7.5% equity. After some discussion and concerns about taking on debt unnecessarily, a counteroffer was made by the founders, adjusting the interest rate to 6% and reducing the equity to 5%.
Eventually, a deal was struck with O’Leary offering a $1 million loan at 7.5% interest and taking a 6.25% equity stake in Boost Oxygen. The negotiation highlighted the Sharks’ interest in the company’s financial stability and market position, ultimately resulting in a deal that combined both debt and equity, providing Boost Oxygen with the needed capital to continue its growth.
