KaZAM Bikes
DEAL
EPISODE SUMMARY
🕓 Air Date: May 10, 2013
Asking For:
$300,000 for 20%
Investor:
Barbara Corcoran, Mark Cuban (50/50)
Deal:
$300,000 for 32%
PRODUCT SUMMARY
Kazam is a balance bike designed to teach kids how to ride by focusing on balance rather than pedals, making the transition to a regular bicycle easier.
WATCH HERE
IN A RUSH?
Click these to jump to the section you want to read.
Background Story
Mary Beth Lugo introduces Kazam, inspired by a concept popular in Europe. Introduced by a European neighbor, Mary Beth tested the idea on her own child, leading to the creation of Kazam. With a patented frame design and a passion for enhancing children’s bike riding experience, Kazam was born out of a desire to improve upon traditional methods of learning to ride a bike.
The Product
Kazam is a balance bike without pedals, focusing on helping children develop balance skills naturally. With a patented frame design featuring a footrest area, Kazam allows children aged 2 1/2 to 5 to learn at their own pace, making the transition to a regular bicycle easier.
Priced at $99.95 direct to consumers and $45 wholesale, Kazam is positioned as a high-quality product in a fragmented market of similar balance bike offerings.
How It Went
The company’s position before Shark Tank
Kazam has shown promising growth, with $1.4 million in sales over three years, projecting $1.5 million for the next year. However, the profit margin is around 36-37%, which the Sharks consider insufficient. The company faces competition from several small companies in the fragmented market. To enhance margins, Kazam plans to transition from batch manufacturing to larger orders, aiming for a 50,000-unit threshold.
The Negotiations:
While facing skepticism from some Sharks, Mary Beth secures a deal with Barbara Corcoran and Mark Cuban for $300,000 for 32% equity, with aspirations to expand Kazam’s product line. Despite initial concerns about high equity stake, Mary Beth successfully negotiates a favorable deal, securing experienced partners to fuel Kazam’s growth.
