Hatch Baby Smart Changing Pad and Scale
DEAL
EPISODE SUMMARY
🕓 Air Date: January 15, 2016
Asking For:
$250,000 for 2.5%
Investor:
Chris Sacca
Deal:
$250,000 for 25%
PRODUCT SUMMARY
Hatch Baby offers a modern redesign of the traditional diaper-changing pad with a built-in Wi-Fi-enabled scale to track a baby's weight and nursing details, providing parents with reassurance and information synced to their smartphones.
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Background Story
Ann Crady-Weiss and Dave Weiss, co-founders of Hatch Baby, both have extensive experience in the baby industry, having worked at BabyCenter, a Johnson & Johnson company. Ann started a company that she later sold to Johnson & Johnson, and together, they ran everything consumer-facing at BabyCenter. Drawing from their experience and recognizing the anxiety new parents face, they developed the Smart Changing Pad to help parents monitor their baby’s development between doctor visits.
The Product
The Smart Changing Pad is a modern take on the traditional diaper-changing pad. It incorporates a sensitive built-in Wi-Fi-enabled scale. Before and after nursing, parents can weigh their baby by tapping the feeding button, recording the weight, and syncing the information to their smartphones.
The primary goal is to reassure parents about their baby’s development and help mothers meet their breastfeeding goals. Priced at $299, the product costs $89 to manufacture, aligning with premium baby products’ pricing. The founders plan to sell exclusively online initially.
How It Went
The company’s position before Shark Tank
Hatch Baby is pre-revenue, having launched its website a week before the Shark Tank pitch. The founders have a $10 million valuation, justified by their experience and the belief that their product meets a genuine need in the market.
They raised $1.7 million on a convertible note in the concept phase, and currently, they are seeking $250,000 to finalize development and bring the product to market. The founders forecast sales of 20,000 units in the first year, projecting $6 million in revenue. They argue that their experience and insights from BabyCenter indicate a strong demand for their product.
The Negotiations:
The negotiation started with a $250,000 investment for a 2.5% equity ask. Initially, the sharks raised concerns about the product’s necessity and high price point. All sharks except Chris Sacca went out, citing doubts about the product’s potential success and affordability. Chris Sacca expressed interest in the smart nursery concept but was concerned about the short-term nature of the issue the product addressed.
Eventually, the founders proposed offering the sharks the same terms as their initial investors on a convertible note. Chris Sacca agreed to invest $250,000 under these terms, securing 25% equity and becoming a partner in Hatch Baby. The deal was finalized, and Chris Sacca became the sole investor in the company, with the founders expressing excitement about his involvement and his track record with companies like Twitter and Uber.
