Collars & Co. – Dress Collar Polo
DEAL
EPISODE SUMMARY
🕓 Air Date: November 11, 2022
Asking For:
$300,000 for 4%
Investor:
Mark Cuban, Peter Jones (50/50)
Deal:
$1,000,000 for 10%
PRODUCT SUMMARY
Collars & Co offers the dress collar polo, a comfortable and stylish shirt that gives the appearance of a dress shirt under a sweater or blazer.
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Background Story
Justin Baer, the founder of Collars & Co, lived in New York for 12 years and disliked the discomfort of wearing a dress shirt under a sweater for the Midtown office look. This discomfort inspired him to create the dress collar polo, a comfortable golf shirt with a firm collar that provides the appearance of a dress shirt. His background in internet marketing and a previous business in event check-in applications helped him master the marketing funnel, which contributed to the company’s rapid growth.
The Product
The dress collar polo by Collars & Co is designed to offer the stylish appearance of a dress shirt under a sweater or blazer while maintaining comfort. It is made from a stretchy and breathable material, making it suitable for various occasions.
The shirt is versatile and can be worn with a tie, under a blazer, with a sweater, or even casually with a polo. Collars & Co offers four different collar styles to suit different preferences.
The product’s benefits include eliminating the discomfort of traditional dress shirts under sweaters, preventing floppy collars, and ensuring that sleeves do not bunch up. It provides a polished and stylish appearance without sacrificing comfort.
Customers can purchase the dress collar polo directly from Collars & Co’s website, as the company primarily operates online. Prices range from $65 to $75, with a 20% net profit margin.
How It Went
The company’s position before Shark Tank
Collars & Co experienced rapid growth, achieving $5.4 million in sales within its first year, all through direct-to-consumer online sales. The company has a healthy profit margin of 20% net profit. The company primarily operates as a direct-to-consumer brand, selling its products through its website. Collars & Co does not rely on wholesalers for distribution. They mentioned that they were looking to secure a line of credit to support inventory and were seeking mentorship and a team to help scale the business.
Collars & Co’s founders did not mention having other investors, indicating that they were open to receiving additional funding. With the offer from Mark Cuban and Peter Jones, the company secured $300,000 in cash and a $700,000 line of credit at market rate interest. This deal brought Mark Cuban and Peter Jones on board as mentors and partners.
The Negotiations:
The pitch started with Justin Baer asking for $300,000 in exchange for 4% equity in Collars & Co. The Sharks were impressed by the company’s rapid growth, having reached $5.4 million in sales in just one year, all through direct online sales. They inquired about the profit margin, which Justin revealed to be 20%. Kevin O’Leary and John, at first, expressed disinterest due to the low equity offering.
However, Mark Cuban and Peter Jones saw potential in the business and made a joint offer of $300,000 for 10% equity and a $700,000 line of credit at market rate interest. This offer was accepted by Justin Baer, securing Mark and Peter as mentors and partners. The negotiation was intense, with Justin initially rejecting the offer and suggesting a 7% equity stake instead of the proposed 10%.
Ultimately, he agreed to the terms offered by Mark and Peter, recognizing the value they could bring to the company’s growth. The negotiations highlighted the Sharks’ expertise and the importance of mentorship and funding in scaling a business like Collars & Co.
