Goumi Kids
DEAL
EPISODE SUMMARY
🕓 Air Date: March 27, 2020
Asking For:
$1,000,000 for 8%
Investor:
Kevin O'Leary
Deal:
$1,000,000 for 10%
PRODUCT SUMMARY
Goumi offers a line of essential baby products, with a flagship product being mittens that stay on due to a signature two-part closure system.
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Background Story
Lily and Linsey, founders of Goumi, met at a Chinese preschool where they both sent their children to learn Chinese. Lily worked for Nike for seven years and later in digital analytics and research at HP, while Linsey sold zippers and buttons to the apparel industry.
The idea for Goumi came when Linsey’s newborn daughter kept scratching herself, prompting them to create a line of baby products that are both functional and stylish. Currently living in China, they’ve shifted their business model from heavy wholesale to direct-to-consumer over the past 18 months.
The Product
Goumi’s flagship product is the Goumi mitts, featuring a unique two-part closure system to stay on babies’ hands and prevent scratching. The Goumi boots use a similar closure system to stay secure. Their patented Goumi Jamms transition from gown to sleep sock with one snap.
The products are designed to address the common issue of baby mittens and booties falling off, with a focus on functionality, comfort, breathability, and sustainability. The products are bundled, such as the “Welcome Home” set for newborns.
The mittens retail for $24, costing $4.50 to make, and the boots retail for $18, costing $2.20 to make. Currently, the sales are a combination of direct-to-consumer and wholesale.
How It Went
The company’s position before Shark Tank
Goumi has been in business for eight years, with a total lifetime sales of $5.2 million. Their shift from heavy wholesale to direct-to-consumer in the last 18 months has shown promise, with direct sales accounting for approximately 15-20%. Year to date, they’ve achieved $5.2 million in sales, with a projected $2.5 million for the year.
The products have a 15% profitability margin. The founders argue that their valuation of $12.5 million is justified based on their ability to raise funds at a $5 million valuation in 2018. They claim to have clear customer acquisition numbers and are confident about reaching a $5 million business in the next year.
The Negotiations:
The Sharks express concerns about the high valuation and challenge the founders on their business model and marketing strategy. Mark Cuban suggests a valuation of $3 million, but the founders are not willing to go below $5 million. Lori Greiner is not interested due to the high valuation, and the other Sharks also opt out.
Kevin O’Leary offers a line of credit at 9% interest, asking for 10% equity. In a surprising turn, Lily and Linsey accept Kevin O’Leary’s offer, thanking the Sharks for their time and expressing their excitement to make money.
