CoinOut – Receips for Rewards App
DEAL
EPISODE SUMMARY
🕓 Air Date: February 18, 2018
Asking For:
$250,000 for 7,50%
Investor:
Robert Herjavec
Deal:
$250,000 for 15%
PRODUCT SUMMARY
CoinOut is a platform that digitizes loose change by allowing users to convert their cash transactions into a digital wallet without the need for an app.
WATCH HERE
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Background Story
CoinOut is the brainchild of Jeff Witten, a resident of Mamaroneck, New York. Witten, who had a background in law and turned down a full-time offer from Apple, was inspired by the success story of Scrub Daddy from the TV show “Shark Tank.” His frustration with loose change and a desire to simplify transactions led him to create CoinOut. Witten, having invested significant time in studying the market, raised $460,000 from family, friends, and personal funds to bring his vision to life.
The Product
CoinOut aims to solve the inconvenience of dealing with loose change by providing a digital alternative. The process involves a user making a cash purchase at a participating merchant, receiving a change, and then opting to use CoinOut.
To do this, the user provides their phone number to the cashier, who enters it into a device, allowing the user to choose whether to transfer just the coins or the entire change to their CoinOut wallet.
The system operates without the need for a dedicated app, ensuring simplicity for both consumers and retailers. CoinOut provides four cash-out options: transferring to a bank account, converting to an Amazon gift card, donating to charity, or redeeming in-store.
How It Went
The company’s position before Shark Tank
CoinOut charges merchants $20 per month and earns 3% on each transaction. Witten mentioned that 32% of all U.S. transactions are still conducted in cash, presenting a substantial market for CoinOut. The platform addresses the costliness of handling physical cash for retailers, offering an additional benefit as an effective loyalty program.
Witten claimed that they had done 2,500 transactions in the past four months, with positive feedback from customers. The business model involves building connections between merchants and cash-paying customers who were previously anonymous. Witten is confident that CoinOut can appeal to major retailers, providing them with a solution to engage the significant portion of customers still using cash.
The Negotiations:
During the negotiations, the Sharks expressed skepticism about the viability of CoinOut in a market dominated by established payment operators. Kevin O’Leary questioned the potential competition, and Mark Cuban raised concerns about the scalability and the focus on only one feature. Lori Greiner opted out of the deal, citing concerns about the contingency and the uncertainty of CoinOut’s success.
Despite the challenges presented, Barbara Corcoran made an offer of $250,000 for a 15% stake, contingent on reaching 700 locations by year-end. However, Jeff Witten declined Barbara’s offer due to the contingency and expressed reluctance about a contingency-based deal. Kevin O’Leary also made an offer of $250,000 for a 25% stake. Robert Herjavec, recognizing the potential in CoinOut, made an offer of $250,000 for a 15% equity stake. However, he attached a contingency, insisting on a successful pilot with a large-scale retailer by year-end.
The negotiation intensified when Robert Herjavec modified his offer to a 15% equity stake, removing the contingency. Despite Jeff’s initial reluctance to move beyond 12.5%, he ultimately accepted Robert’s offer at 15%. Mark Cuban, who had been critical during the pitch, commended Jeff for his negotiation skills. The deal was sealed, marking a successful partnership between CoinOut and Robert Herjavec.
