Singtrix – Home Karaoke System
NO DEAL
EPISODE SUMMARY
🕓 Air Date: October 31, 2014
Asking For:
$1,500,000 for 5%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
SingTrix offers a revolutionary karaoke experience that enhances users' singing abilities, correcting pitch and adding live vocal harmonies, making everyone sound like a professional singer.
WATCH HERE
IN A RUSH?
Click these to jump to the section you want to read.
Background Story
SingTrix, founded by Eric Berkowitz and John Devecka, is a New York-based company that has revolutionized the karaoke experience with its innovative product. Both founders bring a wealth of experience and passion for creating groundbreaking music-related technologies. Eric Berkowitz, one of the co-founders, has a history deeply rooted in the music tech industry. In the ’90s, Berkowitz developed a drumming karaoke game called DrumScape, which he built in his parents’ garage.
This venture turned out to be a significant success, as the related patents were later sold to Activision, a notable player in the gaming industry. Berkowitz’s innovative work in the past laid the foundation for his future endeavors in the music technology space. SingTrix emerged as a result of Berkowitz and Devecka’s shared vision to make singing an enjoyable experience for everyone, regardless of their vocal abilities. The product they introduced to the Sharks is a testament to their dedication to creating a next-generation karaoke machine.
SingTrix not only corrects pitch but also adds live vocal harmonies, allowing users to sound like professional singers without requiring any prior singing experience. The founders’ journey is marked by a commitment to enhancing musical experiences for individuals. SingTrix, born out of Berkowitz’s earlier success in the music tech scene, showcases their collective expertise and determination to bring innovative products to the market. The background story reflects a passion for music technology and a desire to make singing more accessible and enjoyable for everyone.
The Product
SingTrix is a groundbreaking karaoke system that elevates the singing experience to new heights. With over 350 different effects, the SingTrix unit transforms any singing performance, making users sound like their favorite rock stars, regardless of their vocal abilities.
The device is designed to correct pitch, add live vocal harmonies, and offer a range of effects to enhance the user’s singing capabilities. During the demonstration on “Shark Tank,” the founders showcased how SingTrix can turn even the most off-key singer into a polished performer. It allows users to experiment with different voices, sing in different pitches, and enjoy a versatile and customizable karaoke experience.
The SingTrix bundle, priced at $345, includes a 40-watt speaker, stand, studio, and microphone. This comprehensive package provides users with all the necessary components for an immersive and high-quality karaoke session. The product is relatively affordable compared to traditional karaoke setups, making it accessible to a wide range of consumers.
SingTrix is available for purchase, and its user-friendly design ensures that even those with no prior singing experience can enjoy the benefits of a professional-sounding performance. The device caters to various musical preferences, allowing users to sing in different styles and voices. Its affordability, versatility, and ability to make singing enjoyable for everyone make SingTrix a standout product in the world of karaoke entertainment.
How It Went
The company’s position before Shark Tank
SingTrix has exhibited strong performance, particularly in the last six months, showcasing robust sales and attracting attention from a significant consumer electronics company interested in taking over distribution in the U.S. and Europe. During this period, the company achieved $1.2 million in sales, translating to 4,000 units sold at a landed cost of $150 per bundle. The wholesale price for the bundle stands at around $265. The company’s current structure involves a distribution strategy that is poised for expansion, with expectations of selling 30,000 units in the coming year.
The founders have negotiated an exclusive distribution deal with a large consumer electronics company, a move that holds the potential to significantly boost sales and market presence. This deal is crucial for SingTrix’s growth and aligns with their vision to make the product more widely available to consumers. The founders have expressed a desire for funding to be utilized in developing new products, emphasizing a strategic approach beyond a simple financial injection. The company’s valuation, however, became a point of contention during the negotiation.
SingTrix’s strategy to engage with a large consumer electronics company for exclusive distribution indicates a significant partnership that could shape the company’s future. The company’s customer base has been growing steadily, driven by the accessibility and versatility of their product. SingTrix appeals to individuals who seek an enhanced karaoke experience, whether they are beginners or experienced singers looking for a creative outlet. Overall, SingTrix’s current position is marked by promising sales, strategic distribution plans, and the pursuit of additional funding to support future growth and innovation in the competitive market of music technology.
The Negotiations:
The negotiations for SingTrix on “Shark Tank” were intense and featured offers and counteroffers from multiple Sharks. The founders, Eric Berkowitz and John Devecka, initially sought $1.5 million in exchange for a 5% equity stake in their company. However, the negotiation process took unexpected turns as the Sharks scrutinized the company’s valuation and the viability of their business plan. Mark Cuban expressed skepticism about the $30 million valuation and decided not to invest.
Kevin O’Leary made an offer of $1.5 million for 50%, with a reduction to 10% if the founders repaid the investment within 18 months, along with a perpetual $2.50 royalty per unit. This offer was met with hesitation, and the founders ultimately rejected it. Robert Herjavec proposed a $1.5 million investment for a 20% equity stake, but Lori Greiner was more aggressive with a $1.5 million offer for a 30% stake, dropping to 15% upon repayment, and a $2.50 royalty per unit thereafter. In a surprising twist, guest Shark, the representative of Ultra Music, offered $1.5 million for a 25% stake, pledging to finance all future orders.
The founders countered with a bold offer of $1.5 million for just a 7% stake, which was met with disbelief from the Sharks. The negotiation ended with no deal as the Sharks expressed concerns about the company’s valuation and the perceived lack of realism in the counteroffer. Despite the rejection, the founders remained confident in their product and its potential for success. The negotiation showcased the challenging dynamics of securing investment on “Shark Tank” and the importance of finding a balance between valuation and the perceived value of the business.
