Fizzics – Beer Pouring System
DEAL
EPISODE SUMMARY
🕓 Air Date: September 23, 2016
Asking For:
$500,000 for 4%
Investor:
Mark Cuban, Lori Greiner (50/50)
Deal:
$2,000,000 for 16,67%
PRODUCT SUMMARY
Fizzics is the world's first and only portable draft-beer system that enhances the flavor of beer from any can or bottle by utilizing sound waves to perfect the density, stability, and texture of the foam.
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Background Story
Fizzics, founded by Phil Petracca and David McDonald, is a Newark, New Jersey-based company driven by a shared passion for beer and a commitment to enhancing the drinking experience. Both founders bring a wealth of technological expertise to the table, having dedicated their careers to commercializing technology. Phil and David recognized a common challenge faced by beer lovers worldwide—the compromise in taste when enjoying beer from cans and bottles compared to fresh from the tap. Determined to bridge this gap, they set out to revolutionize home beer consumption.
Fizzics was conceived as a solution to deliver the authentic taste of draft beer from any can or bottle, bringing the brewery experience to the comfort of one’s home. The journey began with a successful crowdfunding campaign on Indiegogo, where Fizzics surpassed its initial $50,000 goal, securing $250,000 in support. This resounding success gave Phil and David the confidence to pursue their dream full-time, prompting them to quit their jobs the day after the campaign concluded. The product’s development was rooted in technology, reflecting the founders’ backgrounds as technologists.
They identified the critical element of the beer-drinking experience—the foam—and devised an innovative approach using sound waves to perfect its density, stability, and texture. Fizzics emerged as the world’s first portable draft-beer system, disrupting the market with a unique solution. Fizzics’ background story is one of dedication, entrepreneurial spirit, and a commitment to delivering a product that not only meets but exceeds the expectations of beer enthusiasts. The company’s rapid success and ability to turn a profit within a short timeframe highlight the founders’ strategic vision and the market’s strong reception to their innovative solution.
The Product
Fizzics is a groundbreaking portable draft-beer system designed to elevate the beer-drinking experience by replicating the freshness and flavor of draft beer from any can or bottle. Priced at $199, this innovative device operates without the need for gas, chemicals, or replaceable cartridges. The operation of Fizzics is user-friendly.
Users simply place any size can or bottle, including up to a 64-ounce growler, into the system and insert the feed tube. By pulling the tap handle forward, the system pours the beer under controlled pressure, employing an oscillating sound pressure wave generator to enhance the density, stability, and texture of the foam. Upon pushing the handle backward, the magic of science comes into play, further refining the beer’s aroma and flavor through precise manipulation of sound waves.
The benefits of Fizzics are evident in the improved taste and quality of beer, providing a better-than-tap experience for beer enthusiasts. The foam, considered a critical element of the beer-drinking experience, is optimized to create a smooth and creamy texture. Fizzics is not only a device but a conversation starter, offering a unique and enjoyable way to share and appreciate beer.
How It Went
The company’s position before Shark Tank
Fizzics has demonstrated robust performance since its inception, showcasing a healthy position in the market. The company’s swift entry into the market and rapid sales growth underscore its strong health and consumer appeal. Within eight months of shipping, Fizzics achieved an impressive $3.2 million in sales, attesting to the market demand for its innovative portable draft-beer system. As for partnerships, Fizzics has successfully collaborated with Bed Bath & Beyond, aiming to expand its retail presence. This partnership aligns with Fizzics’ goal to reach a broader consumer base through prominent retail channels.
The founders, Phil Petracca and David McDonald, indicated their interest in being stocked at Bed Bath & Beyond, demonstrating strategic thinking about retail partnerships. Fizzics has positioned itself as a consumer-focused brand, targeting beer enthusiasts who seek an authentic draft-beer experience at home. The product’s success in crowdfunding campaigns and sales figures indicate a strong connection with its target audience. The company’s initial funding came from a successful Indiegogo campaign, where they surpassed their $50,000 goal by raising $250,000. Phil and David’s decision to quit their jobs after this campaign reflects their confidence in Fizzics’ potential.
The founders mentioned that they are in the process of a Series “A” round, aiming to raise $2 million at a $10 million pre-money valuation. This indicates a strategic approach to securing additional capital for scaling operations. Fizzics is currently cash-flow positive, having turned a profit of $220,000. This financial stability showcases the company’s ability to generate revenue and manage its expenses efficiently. The founders’ mention of channel conflict and the need to scale suggests that Fizzics is strategically planning its expansion and distribution channels. The company’s structure is positioned for growth, with plans for a Series “A” round and an institutional investor on board.
The Negotiations:
The negotiations for Fizzics on Shark Tank were dynamic, with all six Sharks expressing interest in the innovative portable draft-beer system. Robert Herjavec made the initial offer of $500,000 for 8%, showcasing belief in the product’s potential. However, Mark Cuban and Lori Greiner jointly presented a more enticing offer of $800,000 for 16.67%, which the founders, Phil Petracca and David McDonald, ultimately accepted. This joint offer not only provided more capital but also brought the expertise and networks of two Sharks into the deal.
Kevin O’Leary also made a competitive offer of $500,000 for 8%, highlighting the widespread interest in Fizzics. Barbara Corcoran, while enthusiastic about the product, expressed skepticism about the founders and opted out of the negotiations. The negotiation dynamics shifted when Mark Cuban and Lori Greiner raised the valuation, emphasizing the value they bring to the table. The founders justified their presence on Shark Tank by highlighting the platform’s unique opportunity and the Sharks’ influential roles in the business world.
Notably, the negotiation concluded with a deal at an increased valuation. Mark Cuban and Lori Greiner secured a 10% equity stake for their joint investment of $800,000. This outcome not only validated Fizzics’ market potential but also showcased the founders’ ability to secure a strategic partnership that went beyond the initial valuation. The negotiation highlighted Fizzics’ successful market entry, impressive sales figures, and the potential for further growth with the support of Mark Cuban and Lori Greiner. The founders successfully navigated the negotiation process, securing a deal that not only met their funding needs but also aligned with their strategic vision for scaling the
