Fresh Patch – Indoor Grass For Dogs
DEAL
EPISODE SUMMARY
🕓 Air Date: February 3, 2015
Asking For:
$150,000 for 10%
Investor:
Mark Cuban, Barbara Corcoran (50/50)
Deal:
$150,000 for 20%
PRODUCT SUMMARY
Fresh Patch is a real-grass delivery service providing a convenient solution for pets, particularly those without access to a backyard.
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Background Story
Four years ago, Andrew Feld, the founder of Fresh Patch, found himself in a predicament when he and his dog Chloe moved from a house with a backyard to a condo in Davenport, Florida. Living in a condo posed a challenge for Chloe, as there was no private backyard space for her to enjoy. Determined to provide a solution, Andrew embarked on a mission to create a miniature backyard on his balcony. While Andrew’s wife initially thought he was a bit eccentric, Chloe absolutely loved the grassy area he had created.
However, the upkeep of the real grass became a cumbersome task, leading Andrew to brainstorm a more sustainable and convenient alternative. This marked the inception of Fresh Patch. Fresh Patch is not merely a product; it’s a real-grass delivery service tailored for the countless pets living in urban environments without the luxury of a backyard. The inspiration for Fresh Patch struck Andrew at a pivotal moment in his life — the day after discovering his wife was pregnant. Fueled by the impending responsibilities of parenthood, Andrew channeled his creativity and determination into building a unique solution for pets.
Fresh Patch stands out as the first real-grass delivery service of its kind, shipping boxes of hydropically grown grass to subscribers nationwide. Andrew’s journey involved learning to build a website, handling trademarks, and managing customer service, showcasing his hands-on approach to the business. This do-it-yourself ethos embodies the passion and commitment that led to the creation of Fresh Patch, a testament to innovation in catering to the needs of pets in a changing urban landscape.
The Product
Fresh Patch, the innovative real-grass delivery service, offers a seamless and natural solution for pets, particularly those residing in urban environments without access to a backyard. The product is a living, hydropically grown grass patch that serves as a convenient alternative to traditional pet relief solutions.
The process is straightforward: subscribers receive regular deliveries of these living grass patches directly to their doorstep. When a new Fresh Patch arrives, the old one can be easily disposed of, eliminating the need for cleaning and mess associated with alternatives like pee pads. The grass is a living plant, naturally breaking down odors, and requires no training for pets to use.
Available in different sizes, including an XL version for larger dogs, Fresh Patch caters to a variety of pet sizes and breeds. The subscription model offers flexibility, with various plans, and the most common being bi-weekly deliveries priced at $25 each. The product is sourced from California and produced for just under $5, making it an affordable and eco-friendly option for pet owners.
Conveniently, Fresh Patch is exclusively sold online, with direct-to-customer sales through their website. This direct model ensures accessibility for pet owners across the country, allowing them to provide a green and enjoyable space for their pets without the hassle of maintaining a backyard.
How It Went
The company’s position before Shark Tank
Fresh Patch has demonstrated robust performance, establishing itself as a leader in the real-grass delivery service niche. The company’s health and position in the market are noteworthy, having achieved over $1 million in sales to date. This success is primarily attributed to its unique offering, addressing the needs of pets in urban settings without access to a backyard. The company’s direct-to-customer model suggests a strong emphasis on building a direct relationship with its customer base. The customer demographic for Fresh Patch is diverse, encompassing pet owners across the United States who seek a convenient and natural solution for their pets’ relief needs.
The subscription model, offering various plans, has garnered around 550 on-the-books subscribers. However, the company faces a challenge with a 75% attrition rate, indicating that two out of three customers do not make repeat purchases. This aspect raises considerations for customer retention strategies. In terms of funding, the company sought $150,000 for a 10% stake in a Shark Tank episode. The investment will primarily be utilized to build an East Coast distribution center, showcasing the company’s commitment to expansion.
The pricing strategy, with bi-weekly deliveries at $25 each, suggests a margin that accommodates production and operational costs. The company’s current structure is detailed by the founder, Andrew Feld, who handles all aspects of the business, from technology to customer service. This hands-on approach showcases a lean organizational structure, emphasizing Andrew’s personal involvement in the day-to-day operations and strategic decisions. The joint investment from Mark Cuban and Barbara Corcoran is expected to bring additional expertise and support, potentially influencing the company’s future structure and growth trajectory.
The Negotiations:
The negotiations for Fresh Patch in the Shark Tank episode showcased a dynamic interplay of offers and considerations from the sharks. Andrew Feld, the founder, initially sought $150,000 for a 10% stake in his real-grass delivery service. Mark Cuban, known for his strategic investments, made a straightforward offer of $150,000 for a 33 1/3% stake, emphasizing the simplicity and growth potential of the product. Barbara Corcoran, with her expertise in retail, also offered $150,000 but for a 20% stake. Her offer came with a condition — Fresh Patch had to commit to bringing the product into retail.
Lori Greiner expressed concerns about the novelty of the product and its appeal, prompting her to remain skeptical. In a surprising turn, Mark Cuban and Barbara Corcoran decided to combine their offers, each taking a 20% stake, resulting in a joint 20% investment for the proposed $150,000. Lori did not make a formal offer, leaving the decision to Andrew. Notably, Andrew accepted the joint offer from Mark and Barbara, appreciating their combined expertise in technology and retail.
The deal resonated with him, as it aligned with the vision of leveraging Mark’s tech prowess and Barbara’s retail connections to elevate Fresh Patch’s market presence. This negotiation process highlighted the strategic thinking of the sharks and their recognition of the potential synergy between technology and retail for Fresh Patch’s growth. The acceptance of the joint offer marked a pivotal moment for the company, setting the stage for collaboration with two seasoned investors to navigate the challenges and opportunities ahead.
