FlexScreen – Flexible Window Screens
DEAL
EPISODE SUMMARY
🕓 Air Date: January 5, 2020
Asking For:
$800,000 for 6%
Investor:
Lori Greiner
Deal:
$800,000 for 50% of retail business
PRODUCT SUMMARY
FlexScreen is the world's first and only flexible window screen, aiming to revolutionize the window screen industry by providing a more user-friendly alternative.
WATCH HERE
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Background Story
Joe Altieri, the founder of FlexScreen, comes from Pittsburgh, Pennsylvania, with a background of over 20 years in selling window screens. Frustrated with the difficulties of installing and removing traditional window screens and the limitations they imposed on the view, Joe took matters into his own hands. Being in the window industry, he experimented in his garage to create a more durable and flexible window screen.
The result was FlexScreen, featuring a frame made of high-carbon oil-tempered spring steel. Recognizing the potential, Joe received encouragement to patent his invention. With $800,000 sought from the Sharks, Joe’s pitch emphasizes the disruptive nature of FlexScreen and the opportunity to improve millions of people’s window experiences.
The Product
FlexScreen stands out as the world’s first flexible window screen. Unlike traditional screens, FlexScreen is designed with a frame made of high-carbon oil-tempered spring steel, providing durability and flexibility. The innovation lies in its ability to be easily installed and removed, addressing a common pain point for users.
The screen material itself is standard, comparable to traditional window screens, but it’s the unique frame that sets FlexScreen apart. The inner core of the frame is constructed from high-carbon oil-tempered spring steel, specifically garage-door spring material.
However, FlexScreen faces a challenge with custom sizing, as each screen is custom-made to fit individual windows. While this ensures a precise fit, it introduces complexities in manufacturing and distribution.
The current pricing strategy involves buying from licensed manufacturers for around $10 and selling to window manufacturers for $11.50, resulting in a slim margin of about 15%. Despite the unique selling proposition, the challenge lies in convincing window manufacturers to convey the value to end consumers.
How It Went
The company’s position before Shark Tank
FlexScreen has shown promising growth in its sales over the past few years. Starting with $400,000 in sales in the first year, the company achieved $5.1 million in sales in the fourth year. However, the profitability is modest, with only $40,000 in profits last year. The explanation provided is that the company is reinvesting in its growth. The gross margin stands at around 15%, a figure questioned by the Sharks, given that FlexScreen operates with licensed manufacturing plants rather than owning its own.
This arrangement, while reducing the risk associated with manufacturing, limits the potential for higher margins. FlexScreen operates as a royalty-like business, purchasing from manufacturers at a lower cost and selling to window manufacturers. The challenge voiced by the Sharks revolves around the company’s marketing strategy and the inability to command a higher price for its premium product. FlexScreen is yet to realize its full potential, with ongoing efforts to establish itself as a standard in the window industry.
The Negotiations:
The Sharks express interest and concerns over FlexScreen’s business model. Mark opts out, emphasizing the need for better utilization of factories. Lori offers $800,000 in exchange for 10% equity, emphasizing her ability to help standardize sizes for retail. Kevin proposes a simpler deal with no contingencies, offering the entire $800,000 as a loan at 9% interest, with 6% equity. Barbara presents an alternative offer of $400,000 cash, $400,000 in credit for manufacturing standard sizes, and 50% of the right to sell online and in stores.
Lori sweetens her deal by offering a 3-year, 6% line of credit and expressing her intention to help make FlexScreen more standard for retail. In a surprising turn, Joe chooses Lori’s offer, citing her connections in the hardware space and the potential for retail success. Barbara expresses disappointment, while Lori defends her strategy, leaving the deal with a sense of competition and triumph.
