Loctote Theft Resistant Bags
DEAL
EPISODE SUMMARY
🕓 Air Date: April 21, 2017
Asking For:
$150,000 for 5%
Investor:
Robert Herjavec
Deal:
$150,000 for 10% equity + $10/bag until $450,000 was repaid
PRODUCT SUMMARY
The Flak Sack is a slash-resistant bag with a hidden steel-reinforced strap, providing security for valuables like phones, keys, and cards. It is water-resistant, UV-resistant, and blocks RFID scanning.
WATCH HERE
IN A RUSH?
Click these to jump to the section you want to read.
Background Story
Loctote Industrial Bag Company, founded by Adam McBride and Don Halpern, is headquartered in Columbus, Ohio. The journey of Loctote began with a common concern: the vulnerability of personal belongings to theft. Adam and Don, both hailing from Columbus, shared a vision to revolutionize the way people safeguard their valuables in daily life. Adam McBride, recruited by Don through an Ohio State University job board, brought a unique set of skills to the partnership. With a background in social media, marketing, branding, and website development, Adam was initially hesitant due to the limited financial prospects.
However, he was captivated by the innovative product Don introduced – a bag that could defy theft attempts with genuine box cutters. Don Halpern, a management consultant with an MBA from Ohio State, spearheaded the business venture. The idea for the product, the Flak Sack, emerged from the founders’ recognition that everyone carries valuable and irreplaceable items daily, such as cellphones, keys, cards, and cash. The realization that theft was a pervasive issue led them to create a bag that not only resisted slashing attempts but also featured a steel-reinforced strap for securing it to fixed objects, making it challenging for thieves to snatch and run.
Their collaboration was forged from a shared commitment to addressing a universal problem. The success story of Loctote Industrial Bag Company reflects the founders’ ingenuity in combining Adam’s marketing prowess with Don’s strategic vision. The Flak Sack not only provides a tangible solution to a prevalent issue but also exemplifies the entrepreneurial spirit that drives innovation. Their journey from a Kickstarter campaign to a deal with a major retailer like Walmart is a testament to their ability to navigate challenges and turn adversity into opportunity.
The Product
The flagship product of Loctote Industrial Bag Company, the Flak Sack, is an innovative and robust solution designed to provide unparalleled security for personal belongings. Crafted from a proprietary high-molecular-weight polyethylene weave, the bag is five times more cut-resistant than Kevlar, ensuring durability and protection against slashing attempts.
The Flak Sack features a hidden steel-reinforced strap, allowing users to securely lock the bag to any fixed object, making it virtually impossible for thieves to snatch and run. This advanced locking mechanism, coupled with the bag’s water-resistant, UV-resistant, and RFID-blocking properties, ensures comprehensive protection for valuables like cellphones, keys, cards, and cash.
The bag’s functionality extends beyond its security features. Its design caters to various uses, whether for daily commuting, travel, or outdoor activities. The Flak Sack’s versatility is complemented by its resistance to wear and tear, making it suitable for different environments.
Priced at $179, the Flak Sack’s cost reflects the investment in its proprietary fabric and advanced security features. The founders initially faced manufacturing challenges in the U.S., leading to a strategic partnership and a transition overseas to enhance scalability and cost-effectiveness.
Consumers can purchase the Flak Sack online through the company’s website, where rich content and engaging videos showcase the bag’s resilience, including demonstrations with real box cutters. The founders emphasize the product’s ability to sell itself through these compelling visuals.
How It Went
The company’s position before Shark Tank
Loctote Industrial Bag Company has exhibited robust performance and notable success in its trajectory. The company’s financial health is evident from its impressive fundraising campaigns on Kickstarter and Indiegogo, where they surpassed their initial goal, raising over $855,000 and an additional $500,000, respectively. These campaigns served as a testament to the strong interest and demand for their flagship product, the Flak Sack. In response to manufacturing challenges in the U.S., the founders strategically sought a partnership to enhance scalability.
This decision facilitated a transition overseas, effectively cutting manufacturing costs in half and paving the way for increased accessibility and market penetration. Partnerships have played a pivotal role in the company’s journey, with Walmart expressing interest in a lower-priced version of the product for retail. This demonstrates Loctote’s appeal to major retailers and potential for mass-market penetration. The company’s customer base has demonstrated remarkable diversity, with sales reaching $1.4 million and products shipped to 75 different countries.
The global appeal of the Flak Sack indicates its versatility and adaptability to various consumer needs and preferences. In terms of funding, the initial success on crowdfunding platforms provided a solid foundation. Additionally, the strategic partnership and transition overseas were likely facilitated by subsequent funding rounds or strategic investments to support the company’s growth. Overall, the company appears well-positioned for further growth, and the Flak Sack has proven itself as a market-worthy and sought-after product.
The Negotiations:
The negotiations in the “Shark Tank” episode for Loctote Industrial Bag Company were dynamic and ultimately resulted in a successful deal with Robert Herjavec. The Sharks expressed initial skepticism about the Flak Sack’s application and the high price point. Kevin O’Leary, also known as Mr. Wonderful, made the first offer with a classic royalty deal – $150,000 for 10% equity, and he wanted $10 per bag until he recouped $450,000. However, he intended to keep the business digital and social, raising concerns about scalability.
The founders countered with a $150,000 investment for 5% equity and a $10 royalty per bag until the capital was recouped. Robert Herjavec was the Shark who saw the potential in the product and the founders’ commitment. He accepted their counteroffer, securing 10% equity and the $10 per bag royalty until $450,000 was repaid. The negotiation involved a crucial element of trust, as the founders emphasized their commitment to keeping the business digital, aligning with O’Leary’s preference.
In a surprising turn, Robert Herjavec revealed a personal struggle with cancer, emphasizing his resilience and determination to secure a deal. This heartfelt revelation seemed to resonate with the founders and possibly influenced their decision to accept Herjavec’s offer. The negotiation showcased strategic thinking on both sides, with the founders seeking a balance between equity and the royalty structure, while Herjavec aimed to mitigate risk while still having a stake in potential upside. In the end, the deal reflected a mutual understanding and a shared vision for the company’s future. The negotiation concluded with a triumphant acceptance, marking the beginning of a partnership that could propel Loctote Industrial Bag Company to new heights with Robert Herjavec as a strategic investor.
