Genius Juice – Organic Smoothies
DEAL
EPISODE SUMMARY
🕓 Air Date: January 19, 2020
Asking For:
$250,000 for 7%
Investor:
Mark Cuban, Barbara Corcoran (50/50)
Deal:
$500,000 for 25%
PRODUCT SUMMARY
Genius Juice is a coconut smoothie made from whole organic young Thai coconuts, blending coconut water and meat, offering a creamy and delicious beverage with no added sugars or preservatives.
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Background Story
Genius Juice, founded by Alex Bayer, is a Los Angeles-based company that emerged from the desire to create a unique and healthy beverage in the crowded market. Alex, the founder and CEO, invested approximately $1.3 million into the business, with $150,000 of it being his personal contribution. The idea behind Genius Juice was born out of the frustration of dealing with an abusive co-packer in Los Angeles about three years ago, which led to the loss of 450 store placements.
Facing this setback, Alex managed to strike a deal with manufacturing partners in Thailand, where coconuts are sourced at their peak nutrition and freshness. These partners not only supplied coconuts but also invested in the business, aiding in the development of machinery and production processes. The unique selling proposition of Genius Juice lies in its whole coconut inclusion in every bottle, setting it apart from competitors in the beverage industry.
The Product
Genius Juice stands out by incorporating whole organic young Thai coconuts into its smoothies, ensuring both the coconut water and meat are included. This process, from cracking open the coconuts to blending and bottling, takes five hours or less, preserving freshness and nutritional value.
The three available flavors are original, turmeric, and coffee, each containing a full coconut. With 100 calories per bottle and no added sugars or artificial flavors, Genius Juice positions itself as a healthy beverage option.
The product is priced between $4.99 and $5.99 at retail. Its current distribution strategy focuses on quality over quantity, being present in about 1,100 stores, with plans to expand to an additional 400 locations.
The refrigerated transportation, though posing a logistical challenge, ensures the product’s freshness. Manufacturing partners in Thailand handle the sourcing, extraction, blending, and bottling of the coconut smoothies, with a frozen transportation process. This meticulous approach distinguishes Genius Juice in a market where shelf stability often determines success.
How It Went
The company’s position before Shark Tank
Genius Juice, as of the pitch, had achieved $367,000 in total sales the previous year and was on track to potentially triple that figure in the current year, reaching $320,000 halfway through. With distribution in 1,100 stores, the company’s strategy revolves around targeted placements for optimal sales velocity. The manufacturing partner in Thailand, located close to the source of coconuts, ensures peak nutrition and freshness.
The partners currently own about 3-4% on a convertible note. Alex Bayer had invested $150,000 personally, and the company was seeking $250,000 for a 7% equity stake to fund production, marketing, and working capital. The company’s break-even point was projected to be at $2.5 million, and they were anticipating a net profit at that stage. However, their valuation was contested during the negotiation.
The Negotiations:
In the negotiation phase, Barbara Corcoran and Mark Cuban both made offers. Barbara offered the requested $250,000 but asked for 14% equity. Kevin, acknowledging the potential dilution in future rounds, proposed a debt deal: $250,000 at 9% interest for 3 years, in addition to 7% equity. However, Barbara and Mark collaborated on a joint offer of $250,000 each for a total of $500,000, with the condition of receiving 25% equity collectively.
Alex Bayer accepted this joint offer, securing funding and expertise from both Sharks. Despite initial concerns about the competitive and challenging nature of the beverage industry, the unique proposition and taste of Genius Juice, combined with the experience and support of Barbara and Mark, led to a successful deal.
