PittMoss – Peat Moss Alternative
DEAL
EPISODE SUMMARY
🕓 Air Date: April 17, 2015
Asking For:
$600,000 for 25%
Investor:
Mark Cuban, Kevin O'Leary, Robert Herjavec (33.30)
Deal:
$600,000 for 35%
PRODUCT SUMMARY
PittMoss is a sustainable alternative to peat moss, made from recycled newspaper, designed to enhance plant growth while addressing environmental concerns associated with traditional peat moss harvesting.
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Background Story
Mont Handley, the visionary founder of PittMoss, originates from Pittsburgh, Pennsylvania. His fascination with commercial greenhouses ignited during his childhood, leading him to purchase his first greenhouse at the age of 12 without his parents’ knowledge. After college, Mont managed five locations of a retail nursery, where the idea for PittMoss took root. The inspiration for PittMoss arose from Mont’s deep concern about the environmental consequences of peat moss harvesting. Peat moss, a natural soil additive widely used in gardening, has devastating effects on peatlands worldwide, releasing significant carbon pollution into the atmosphere.
To combat this issue, Mont conceived PittMoss as a sustainable alternative. Mont’s journey to bring PittMoss to fruition involved a considerable personal and financial commitment. He quit his job, cashed out his 401(k)s, and invested in building a manufacturing plant in North Huntington, Pennsylvania, just outside of Pittsburgh. His determination to create a business that not only achieved financial success but also contributed to collective good for the planet underscores the core values of PittMoss.
Motivated by a desire to address the environmental impact of traditional soil additives and guided by his extensive experience in the horticulture industry, Mont forged ahead with the development of PittMoss. This innovative product, made from recycled newspaper and a proprietary blend of organic additives, represents Mont’s dedication to building a business that aligns with sustainability and environmental responsibility. The PittMoss story encapsulates a blend of entrepreneurial spirit, environmental consciousness, and a deep-rooted passion for creating positive change in the world of gardening and landscaping.
The Product
PittMoss, the brainchild of Mont Handley, is a revolutionary soil alternative designed to transform gardening and landscaping practices. Crafted from recycled newspaper and a proprietary blend of organic additives, PittMoss serves as an eco-friendly replacement for traditional peat moss.
The product’s innovative composition offers numerous benefits over conventional soil additives. It excels in water retention, providing plants with optimal moisture levels and reducing the frequency of required watering. Unlike peat moss, PittMoss is uniform, sterile, and devoid of pathogens, ensuring a clean and healthy environment for plant growth. Its superior quality results in increased plant growth rates and healthier yields.
PittMoss addresses environmental concerns associated with peat moss harvesting, which releases substantial carbon pollution. By using recycled newspaper, it not only prevents waste but also contributes to sustainability efforts. Available for purchase, PittMoss targets commercial growers, retail garden centers, and home gardeners alike.
Its cost-effectiveness, being 15-25% cheaper than peat moss, positions it competitively in the market. The product’s potential to save growers up to 15% on operating costs further enhances its attractiveness. PittMoss is a versatile solution for a wide range of plants, making it suitable for diverse horticultural applications.
How It Went
The company’s position before Shark Tank
PittMoss, despite modest initial sales, shows promise and strategic positioning in the market. The company’s health and position are marked by its commitment to sustainability, innovative product offerings, and securing significant sales agreements. As of now, PittMoss has sales agreements totaling $168,000, indicating substantial market interest. However, the challenge lies in capacity constraints, with the existing plant capable of producing 200 tons per year, generating $60,000 in revenue. The company faces a backlog in fulfilling orders due to this limitation.
PittMoss has strategically aligned itself with angel investors, notably BlueTree Allied Angels, an angel investment group. The founder, Mont Handley, took a substantial personal and financial risk by quitting his job, cashing out his 401(k)s, and independently building a manufacturing plant in North Huntington, Pennsylvania. Although the initial sales of $22,000 over seven months may appear modest, the company’s commitment to sustainability and its innovative product have attracted attention and support. The current funding structure includes a commitment from BlueTree Allied Angels for $400,000 in convertible notes.
While the existing plant’s revenue-generating capacity is $60,000, the company has plans to expand with additional lines, projecting a revenue capacity of $3.2 million for a cost of $240,000. PittMoss envisions scaling its impact by targeting commercial growers first and eventually entering the retail space with PittMoss-branded plants. This strategic approach, along with partnerships with investors like BlueTree Allied Angels, positions PittMoss for potential growth in the evolving landscape of sustainable horticulture. The company’s commitment to environmental responsibility and its unique value proposition make it an intriguing player in the industry, albeit with the challenge of overcoming current capacity limitations.
The Negotiations:
The negotiations for PittMoss in the “Shark Tank” episode were dynamic and culminated in a successful deal. Mont Handley, the founder, initially sought $600,000 for 25% equity, but the Sharks expressed concerns about the low initial sales and the challenges in changing consumer behavior. Barbara Corcoran exited the deal early, stating that she found the business unattractive due to its low sales. Lori Greiner followed suit, expressing reservations about investing in an unproven model and the difficulty in educating consumers to switch to a new product.
However, Mark Cuban, Kevin O’Leary, and Robert Herjavec saw potential in PittMoss and jointly presented an offer of $600,000 for 35% equity. The negotiation continued as Mont countered for a 30-35% equity range, emphasizing the value of having one or more Sharks on board. Mark Cuban, recognizing the potential and the value of having multiple Sharks involved, agreed to a compromise, offering $600,000 for 35% equity. Mont accepted the offer, securing a deal with Mark, Kevin, and Robert as investors.
This collaboration with the Sharks not only provided PittMoss with the necessary capital to address its capacity limitations but also brought strategic expertise and networking opportunities to the table. The negotiation showcased the Sharks’ belief in the product’s potential to make a positive impact on the environment and the gardening industry. Mont’s willingness to adjust his valuation and the Sharks’ collective decision reflected a successful negotiation, highlighting the balance between investment terms and the shared vision for the future success of PittMoss.
