Outer – Premium Outdoor Furniture
DEAL
EPISODE SUMMARY
🕓 Air Date: November 17, 2019
Asking For:
$750,000 for 4%
Investor:
Lori Greiner
Deal:
$750,000 for 5% + $30/unit royalty until $1,000,000 is paid back
PRODUCT SUMMARY
Outer offers a durable and comfortable outdoor sofa with a patent-pending Outer Shell Cover to protect cushions from the elements, revolutionizing the outdoor furniture market.
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Background Story
Co-founders Jiake Liu and Terry Lin presented Outer on Shark Tank, addressing common issues with outdoor furniture such as discomfort, easy deterioration, and inconvenient storage. They introduced the Outer Shell Cover, a patent-pending innovation that protects the cushions from the elements, solving the “soggy bottom syndrome.”
The duo aimed to create a perfect outdoor sofa that combines comfort and durability. They also revolutionized the shopping experience with a proprietary Neighborhood Showroom platform, converting customers’ spaces into showrooms.
The Product
Outer’s outdoor sofa, priced at $2,500 for a three-seater, is designed for comfort and durability. The modular chairs cost $800 each, with a manufacturing cost of $225. The key feature is the Outer Shell Cover, a patent-pending protective cover that shields the cushions from weather conditions.
The cover is easy to use, allowing users to pull it over the sofa in the evening and store or carry it for additional protection. The product is designed to eliminate the inconvenience associated with traditional outdoor furniture, providing a solution to common problems.
How It Went
The company’s position before Shark Tank
Outer, launched four months before the pitch, had achieved $800,000 in sales. The co-founders projected closing the year with at least $1 million in sales and aimed for $5 million in the following year. They justified their $18 million valuation by highlighting the $9 billion outdoor furniture market in the U.S. and a recent VC-backed investment at a $13.5 million valuation.
Outer’s co-owners, Jiake Liu and Terry Lin, respectively, owned 60% and 25% of the company, with the remaining 15% owned by Liu’s family factory. They disclosed that the family factory subsidized the business by not taking a margin and deferred payment until the inventory was sold.
The Negotiations:
The negotiation saw skepticism from some sharks regarding the valuation. Mark Cuban and Anne Wojcicki opted out, expressing concerns about the high valuation. Kevin O’Leary and Lori Greiner were the remaining interested sharks. O’Leary made an equity-only offer of $750,000 for 20%, valuing the company at $3.75 million.
Lori Greiner, recognizing the potential of the business, offered $750,000 as a loan at 3% for 5% equity and a $30 per unit royalty until $1 million is paid off. Despite Kevin’s equity-only offer, the co-founders chose Lori’s deal, valuing the partnership and the connection they felt with her. Lori’s offer provided a balance between equity and royalty, securing a deal for Outer.
