Pearachute – App for Kid’s Activities
DEAL
EPISODE SUMMARY
🕓 Air Date: October 29, 2017
Asking For:
$500,000 for 6%
Investor:
Mark Cuban
Deal:
$500,000 for 15%
PRODUCT SUMMARY
Pearachute is a monthly membership club that simplifies parents' ability to discover, book, and drop into the best kids' activities in their city.
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Background Story
Desiree Vargas Wrigley, the CEO and founder of Pearachute, is a parent of two boys and a stepmom to another child. Her inspiration came from the frustration of signing up her kids for activities only to find they lost interest, leading to wasted resources. Drawing from her experience as the founder of GiveForward, one of the first crowdfunding sites, Desiree identified the need for a solution. She envisioned a platform that allows parents to easily explore, book, and attend various kids’ activities without the commitment of long-term classes.
GiveForward’s success, generating $5 million in revenue annually, showcased Desiree’s entrepreneurial skills. Although she eventually stepped back from managing GiveForward, the lessons learned fueled her determination to build Pearachute. The idea germinated from the challenges of parenting her own children and the realization that modern solutions were needed for busy parents who want to expose their kids to diverse activities.
The Product
Pearachute is a subscription-based platform that revolutionizes how parents discover and engage their children in activities. The service operates as a monthly membership club, offering parents access to a diverse range of kids’ classes in their city.
The process is user-friendly, as parents can explore thousands of classes, filter by age and interest, and book sessions directly through the Pearachute website or mobile app.
The key feature of Pearachute is its flexibility. Parents can easily cancel up to one hour before a scheduled class without penalties, addressing the unpredictability of children’s schedules. The platform benefits both parents and activity providers, ensuring classes are filled and generating revenue for the latter.
Launched just 126 days ago in Chicago, Pearachute introduced two subscription plans: a five-pack at $79 and an unlimited plan at $99. Despite being relatively young, the company has gained traction, boasting over 600 subscribers and generating almost $50,000 in revenue within the first four months.
Pearachute has partnered with 30 activity providers, offering a mobile-friendly portal for instructors to manage class attendance and adjust inventory in real-time. This strategic approach ensures seamless interaction between Pearachute and its partners.
How It Went
The company’s position before Shark Tank
Within its short existence, Pearachute has showcased promising performance. With nearly $50,000 in revenue and over 600 subscribers, the company has successfully filled a gap in the market for parents seeking flexible and diverse activities for their children. Desiree’s previous experience with GiveForward, a successful crowdfunding platform, demonstrates her ability to build and scale businesses. While she still owns equity in GiveForward, her exclusive focus is currently on Pearachute.
The lessons learned from her previous venture have equipped her to accelerate Pearachute’s growth more efficiently. Pearachute’s business model is based on a monthly subscription, providing a consistent revenue stream. The company’s strategic partnerships with activity providers contribute to its success by ensuring a variety of high-quality classes for subscribers. The mobile-friendly portal for partners allows real-time adjustments, enhancing the user experience.
The company’s current focus is on Chicago, with plans to expand to other cities, starting with Dallas. Desiree envisions tapping into the growing market of millennial parents who prioritize experiences for their children. The potential for expansion is significant, given the demographic trends and changing preferences.
The Negotiations:
Desiree entered the Shark Tank seeking $500,000 for a 6% equity stake in Pearachute. While other sharks expressed concerns about Pearachute’s expansion strategy and Desiree’s entrepreneurial background, Mark saw potential in her journey and the business concept. Mark Cuban, impressed by Desiree’s story and the potential of the business, offered $500,000 for a higher equity stake of 15%.
The negotiation revolved around finding a middle ground. Desiree accepted Mark’s offer of $500,000 for 15%, valuing the company at $3.33 million. Mark’s offer came with additional support, including office space in Dallas and access to his foundation’s network, aiming to accelerate Pearachute’s growth.
The negotiation showcased Desiree’s determination and Mark’s willingness to invest not only capital but also resources and expertise to help Pearachute succeed in a competitive market. In the end, the deal was made, and Mark Cuban became a partner in Pearachute, providing the company with a significant boost in terms of funding and strategic support.
