Storage Scholars – Student Storage
DEAL
EPISODE SUMMARY
🕓 Air Date: October 14, 2022
Asking For:
$250,000 for 5%
Investor:
Mark Cuban
Deal:
$250,000 for 10%
PRODUCT SUMMARY
Storage Scholars provides a convenient and affordable college moving service for students, including packing, storage, and delivery of their belongings during summer breaks.
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Background Story
Matt Gronberg and Sam Chason, both college students at Wake Forest University, founded Storage Scholars to address the challenges students face during summer break move-outs. Facing the burden of high student debt, they recognized a gap in the market and saw an opportunity to create a business that would not only help students but also provide employment for fellow students. They began by offering moving services at their own college and expanded to other campuses, gradually building their business.
The Product
Storage Scholars offers a comprehensive moving service for college students. Students can create an account online, add their parents as overseers, and pay a fully refundable $50 deposit.
The service includes delivering packing supplies such as boxes, tape, bubble wrap, and labels to students on campus a week before final exams. Students pack their belongings, lock their rooms, and go home.
The company partners with universities to gain access to dorm rooms once campuses are empty, and it moves all the students’ belongings into storage for the summer. When students return for the next semester, their items are delivered to their new rooms.
The average cost for the service is $559, which includes all packing supplies, pickup, four months of storage, delivery, and $100 of complimentary insurance for each item.
How It Went
The company’s position before Shark Tank
Storage Scholars is currently operating on 23 college campuses across nine states, with a primary focus on expanding within the United States. The company’s revenue for the current year stands at an impressive $1.826 million, highlighting its significant growth and potential. Storage Scholars has partnered with universities to gain access to dorm rooms for its unique packing and storage service. The company’s strategy involves securing endorsements from colleges to promote its services to students.
The cost structure involves an average service fee of $559 per customer, which includes packing supplies, pickup, storage, and delivery. The company’s costs, totaling approximately $199 per customer, cover all expenses related to the service, including labor, warehousing, and supplies. Storage Scholars has a custom-built web application that streamlines its operations, enabling it to manage 3,300 moves across 23 campuses during a single week with a high level of efficiency.
The Negotiations:
The founders, Matt and Sam, entered the Shark Tank seeking $250,000 for a 5% equity stake in their company, Storage Scholars. The Sharks were impressed with the business concept and its potential for growth. After sharing details about their success and expansion to 23 college campuses, the offers began pouring in. Kevin O’Leary made the first offer, proposing $250,000 for a 20% equity stake. Daymond John followed suit with the same offer of $250,000 for 20%.
Robert Herjavec entered the negotiations with a bold offer, presenting $500,000 for 20% equity, doubling the founders’ original ask. This offer stood out as the most substantial investment. However, Matt and Sam chose to explore other possibilities. Mark Cuban offered $250,000 for 10%. Matt and Sam countered Mark’s offer, asking if he would consider $350,000 for 8% equity, a more favorable deal for them. Mark Cuban, recognizing the potential of Storage Scholars, then made a revised offer. He offered $250,000 for 10% equity.
This deal was more aligned with the founders’ counteroffer and provided them with the expertise and connections Mark could offer. They believed that Mark’s passion for their mission of eliminating college debt, combined with his business acumen, made him the right partner to help propel Storage Scholars to the next level of success. The deal was sealed, and they left the Shark Tank with a strong partnership in place.
