Gallant – Stem Cell Banking for Pets
DEAL
EPISODE SUMMARY
đź•“ Air Date: November 17, 2019
Asking For:
$500,000 for 2%
Investor:
Lori Greiner, Anne Wojcicki (50/50)
Deal:
$500,000 for 5%
PRODUCT SUMMARY
Gallant provides stem-cell banking and regenerative medicine for pets, allowing owners to save their pet's young, healthy stem cells during routine spay or neuter procedures.
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Background Story
Aaron Hirschhorn, founder of Gallant, hails from Philadelphia, Pennsylvania. The inspiration for Gallant struck him when he witnessed his family dog, Rocky, suffering from debilitating arthritis while he was recovering from chronic back pain with stem-cell therapy. Wondering if the same revolutionary science could be applied to pets, he founded Gallant—a company offering stem-cell banking and regenerative medicine for pets.
Hirschhorn’s journey took a turn when, in 2009, he and his wife lost their jobs. To make ends meet, they started dog sitting in their home, eventually evolving it into an online platform for dog sitting, akin to Airbnb for dogs. The venture, named DogVacay, flourished, generating over $100 million in sales in under six years. Two years ago, DogVacay merged with a competitor and rebranded as Rover, now valued at $925 million.
Hirschhorn’s educational background includes majoring in neuroscience in college and initially working as a high-school science teacher. His keen interest in science, coupled with personal experiences, led him to the idea of applying stem-cell technology to pets.
The Product
Gallant’s core offering is stem-cell banking for pets. Similar to banking children’s umbilical cord stem cells at birth, Gallant allows pet owners to save their pet’s young, healthy stem cells during a routine spay or neuter procedure. The process is simple—owners sign up on the Gallant website, and the company sends a kit to their veterinarian, taking care of the rest.
The patented technology isolates stem cells from reproductive tissue that is typically discarded during spaying or neutering. These stem cells hold the potential to treat various disorders, ranging from kidney disease to broken bones. In research animals, stem cells have shown the capability to extend healthy life by up to 30%.
Gallant operates in two divisions—a therapeutics division actively developing stem-cell medicines and a consumer stem-cell banking division set to launch. The consumer side, launching in three weeks, involves selling stem-cell banking kits directly to pet owners for $95 annually. The kit is sent to the veterinarian, creating a revenue stream for them.
How It Went
The company’s position before Shark Tank
Gallant’s performance is rooted in the successful track record of its founder, Aaron Hirschhorn. The company is backed by a strong investor network, having raised a total of $10 million. This capital is fueling the business, with a significant portion allocated to research and development, highlighting their commitment to advancing stem-cell technology for pets.
The consumer stem-cell banking division is poised to launch in three weeks, and the therapeutics division is actively engaged in developing stem-cell medicines. The company’s founder, leveraging his background in neuroscience, has assembled a team of top minds in the field of veterinary regenerative medicine. They hold four key patents that secure Gallant’s position in the multi-billion-dollar market.
Gallant’s previous success with DogVacay, now Rover, demonstrates Hirschhorn’s ability to build and scale successful ventures. The merger with a competitor resulted in a company valued at $925 million. This track record adds credibility to Gallant’s potential for success.
The business model involves a $95 annual fee for pet owners to store their pet’s stem cells, with the kit sent directly to the veterinarian. The veterinarian receives a $100 collection fee, creating an additional revenue stream. Despite the Sharks’ concerns about the company’s burn rate and the potential for financial losses on the consumer side, Hirschhorn asserts that Gallant is well-capitalized, with a monthly burn rate of $400,000, mostly allocated to R&D.
The Negotiations:
The negotiations on “Shark Tank” began with Aaron Hirschhorn seeking $500,000 for 2% equity in Gallant. The other Sharks expressed concerns about the business model and the potential for financial losses on the consumer side. Mark Cuban and Daymond John decided to opt out, expressing skepticism about the sustainability of Gallant’s consumer-focused approach.
Anne and Lori recognized the potential of the business, emphasizing their belief in the long-term prospects of stem-cell technology for pets. They offered $500,000 for 8%, representing a combined effort to bring Gallant to the forefront of the market. This offer reflected their confidence in the emerging science, despite the challenges presented by the consumer-facing aspect of the business.
Aaron Hirschhorn, appreciating the value and expertise that both Anne and Lori brought to the table, negotiated for a lower equity stake. He proposed a counteroffer of 4%, attempting to strike a balance between securing necessary funding and retaining a larger portion of the company. Anne and Lori joined forces to counter with an offer of $500,000 for 5%.
This collaboration marked a successful outcome for Gallant, securing not only the financial investment needed but also the strategic support of two seasoned Sharks with complementary skills and networks. The negotiations showcased the challenges and opportunities associated with pioneering a new market, with the Sharks ultimately recognizing the potential of Gallant’s mission to revolutionize pet care through stem-cell technology.
