Rumi Spice Saffron
DEAL
EPISODE SUMMARY
đź•“ Air Date: May 5, 2017
Asking For:
$250,000 for 5%
Investor:
Mark Cuban
Deal:
$250,000 for 15%
PRODUCT SUMMARY
Rumi Spice is a company that empowers Afghan farmers by creating a market for premium Afghan saffron, known as the queen of all spices, while aiming to cultivate peace and harvest profits.
WATCH HERE
IN A RUSH?
Click these to jump to the section you want to read.
Background Story
Rumi Spice, based in Chicago, Illinois, was founded by three U.S. Army veterans—Kim, Emily, and Keith—whose backgrounds and experiences converge in a mission to make a difference in war-torn Afghanistan. The founders’ military service took them to Afghanistan, where they witnessed a country grappling with the aftermath of war, terrorism, and opium cultivation. Kim, Emily, and Keith, with diverse roles ranging from supporting Special Operations to leading a Route Clearance platoon and working with tribal elders, saw beyond the prevailing narrative of conflict.
Instead, they discovered fields of violet-colored flowers, the source of saffron, in Afghanistan. Recognizing the economic potential of this rare commodity, they envisioned a way to empower Afghan farmers and reconnect the country with the international marketplace. Their journey began when Keith, during a deployment in one of Afghanistan’s most dangerous provinces, met a farmer named Haji Yosef selling vibrant red saffron. Intrigued by the quality of the spice and its potential impact, Keith reached out to Kim and Emily, who were pursuing their education at Harvard Business School. This dynamic trio, with military discipline and business acumen, collaborated to turn their discovery into a business.
Rumi Spice was born out of a commitment to create a market for premium Afghan saffron, known as the queen of all spices. The founders aimed not only to provide a high-quality product but also to reinvest profits into the infrastructure of Afghanistan, fostering economic growth and stability. Their unique blend of military service, educational backgrounds, and a shared commitment to social impact has shaped Rumi Spice into a company that goes beyond being a spice supplier – it is a vehicle for positive change in a region that has faced decades of adversity.
The Product
Rumi Spice specializes in offering premium Afghan saffron, the world’s most expensive spice, harvested from violet-colored flowers in Afghanistan. Known for its distinct flavor, aroma, and vibrant color, saffron is a culinary treasure. Rumi Spice’s saffron is meticulously hand-harvested, ensuring the highest quality and purity.
The product’s versatility is showcased through various applications, both in savory and sweet dishes. The founders presented saffron-infused creations during their Shark Tank pitch, including saffron ghee with lemon zest over yogurt and saffron-infused honey drops. These examples highlight the spice’s adaptability in enhancing the flavors of diverse cuisines.
Consumers can purchase Rumi Spice saffron directly from the company’s retail channels, such as their online platform. The retail price stands at $18 per gram, while restaurants can acquire it at $140 per ounce. Rumi Spice aims to position itself as a luxury brand within the saffron market, emphasizing the premium quality and unique sourcing from Afghanistan.
Beyond individual consumers, the company collaborates with partners like Blue Apron and renowned chefs, incorporating saffron into various culinary products. This strategic approach allows Rumi Spice to reach a broader audience and establish saffron as a versatile and essential ingredient in the culinary world. The founders have successfully crafted a product that not only meets the highest culinary standards but also contributes to a larger mission of empowering Afghan farmers and rebuilding the nation’s economic foundation.
How It Went
The company’s position before Shark Tank
Rumi Spice has demonstrated commendable performance, positioning itself as a prominent player in the saffron market while maintaining a commitment to social impact. With $400,000 in sales to date and a projected $750,000 for the current year, the company has established a strong foothold within the saffron industry, particularly in the United States. The company has strategically partnered with industry giants like Blue Apron, featuring saffron in their meal kits. This collaboration not only expands Rumi Spice’s reach but also introduces the spice to a diverse customer base. Additionally, the founders have collaborated with renowned chefs, including Daniel Boulud, to create unique saffron-related products such as saffron butter and spice blends.
Rumi Spice’s commitment to empowering Afghan farmers is evident in its direct sourcing model. The company works closely with Afghan farmers, creating a sustainable market for premium saffron and reinvesting profits into the local infrastructure. This unique approach not only ensures the authenticity and quality of the product but also contributes to the socio-economic development of Afghanistan. In terms of funding, Rumi Spice sought $250,000 in exchange for 5% equity during their Shark Tank pitch. Mark Cuban’s offer of $250,000 for 15% was accepted, providing the company with a strategic partnership and additional capital for growth. The founders highlighted their intention to use profits for reinvestment, reflecting a holistic approach to business that goes beyond financial gains.
Rumi Spice’s focus on becoming profitable in the next month and projecting $1.5 million in sales for the following year indicates a positive trajectory. The company’s high-margin business model, with gross margins online ranging from 75% to 80%, positions it for sustainable growth. Rumi Spice’s structure emphasizes its commitment to both profitability and social impact, with a team comprising military veterans and business professionals united by a shared vision of cultivating peace and prosperity in Afghanistan.
The Negotiations:
The negotiations during Rumi Spice’s Shark Tank appearance were marked by both challenges and ultimately a successful partnership with Mark Cuban. The founders initially sought $250,000 in exchange for 5% equity, valuing the company at $5 million. The Sharks, particularly Kevin O’Leary, raised concerns about the high pricing strategy and the potential limited market reach due to the luxury positioning of the product. Lori Greiner expressed hesitation based on her personal taste preferences for saffron, while Robert Herjavec questioned the company’s valuation and the viability of their business model.
Despite these challenges, Mark Cuban and Robert Herjavec emerged as interested investors. Cuban offered $250,000 for a 15% equity stake, emphasizing the value he could bring to the company through his expertise and connections. Herjavec, while acknowledging the founders’ mission and expressing interest, made a competing offer of $250,000 for a 25% stake. The founders ultimately chose to accept Mark Cuban’s offer, seeing it as the more favorable deal for the growth and impact of Rumi Spice. This decision was driven by the belief that Cuban’s experience and connections would contribute significantly to the company’s expansion.
The negotiation showcased the delicate balance between the founders’ valuation and the Sharks’ expectations. Despite initial skepticism and challenges, Rumi Spice secured a strategic partnership with Mark Cuban, aligning with their mission to empower Afghan farmers and cultivate peace. The acceptance of Cuban’s offer marked a pivotal moment in the company’s journey, ensuring not only financial support but also guidance and mentorship for Rumi Spice’s continued success.
