TekDry – Water Removal for Cell Phones
DEAL
EPISODE SUMMARY
🕓 Air Date: October 7, 2016
Asking For:
$500,000 for 5%
Investor:
Kevin O'Leary
Deal:
$500,000 for 5%
PRODUCT SUMMARY
TekDry has developed a machine that can revive water-damaged tech devices, such as phones, tablets, and laptops, using a unique process involving heat and the removal of air from a chamber.
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Background Story
TekDry, headquartered in Denver, Colorado, was founded by Adam Cookson and Craig Beinecke, two innovators determined to address the pervasive problem of water damage to electronic devices. Adam and Craig, both hailing from Denver, brought unique skill sets to the table. Adam Cookson, with a background in engineering, possessed a keen interest in the intersection of technology and problem-solving. His expertise in understanding the mechanics of electronic devices became the cornerstone of TekDry’s innovative solution. Craig Beinecke, on the other hand, brought valuable business acumen to the partnership.
His experience in strategic planning and market analysis contributed to the company’s growth strategy. The inspiration for TekDry struck the founders when they observed the alarming rate at which people were losing their devices to water-related accidents, with toilets being a primary culprit. The duo recognized the need for an efficient and reliable solution to salvage water-damaged tech gadgets. Thus, TekDry was born with a mission to provide a first-aid remedy for beloved but waterlogged devices.
The founders, leveraging their diverse backgrounds, embarked on a journey to create a groundbreaking solution. Their collaborative effort resulted in the development of a unique machine capable of revitalizing various tech devices, from phones to laptops, by employing a scientific process involving heat and the removal of air from a specialized chamber. TekDry’s commitment to solving a common and costly issue in a user-friendly manner has driven its expansion from a few stores to a presence in 82 big-box retail locations.
The Product
TekDry’s flagship product is a cutting-edge device designed to resurrect water-damaged tech devices efficiently. The machine utilizes a sophisticated process that distinguishes it from traditional remedies, providing a hassle-free solution for users facing the dire consequences of liquid exposure. The device, resembling a chamber, accommodates a variety of tech gadgets, including phones, tablets, laptops, and watches.
The magic lies in the unique combination of heat and the removal of air from the chamber. When a water-damaged device is placed inside, special metallic beads within the chamber generate a gentle heat that, when combined with the removal of air, transforms liquid within the device into gas. This process occurs in real-time and promises device recovery in just 30 minutes. TekDry’s solution offers several key benefits. Firstly, there’s no need for disassembly or dismantling of the waterlogged device. The process is non-invasive, ensuring that delicate components remain intact.
Additionally, the company emphasizes the simplicity of the service, making it accessible even for those without technical expertise. Customers can avail themselves of TekDry’s services through various channels. The company is present in 82 big-box retail stores, providing an in-store option for customers. Additionally, TekDry offers a mail-in service, allowing users to send their water-damaged devices for recovery.
How It Went
The company’s position before Shark Tank
TekDry has undergone significant growth and expansion since its inception, demonstrating a robust performance in the competitive market for device recovery solutions. The company’s health and position have seen a positive trajectory, marked by strategic partnerships and an expanding retail presence. In terms of partnerships, TekDry has successfully entered into agreements with 82 big-box retail stores, showcasing a collaborative effort to make their innovative solution widely available. These retail partnerships not only enhance the company’s visibility but also contribute to revenue streams and customer accessibility.
As for wholesalers, TekDry’s approach seems focused on a direct-to-consumer model, with an emphasis on in-store services and a mail-in option. The absence of explicit information on wholesalers suggests that the company may prioritize direct relationships with end consumers. TekDry’s customer base primarily consists of individuals seeking a reliable solution for water-damaged tech devices. The universal appeal of their service, spanning devices like phones, tablets, laptops, and watches, caters to a broad demographic. In terms of funding, TekDry has successfully raised $2.2 million, a testament to investor confidence in the company’s innovative approach to device recovery. This funding has likely played a crucial role in the company’s expansion, allowing them to develop and deploy their unique solution on a larger scale.
TekDry’s projection of $650,000 in sales for the current year, following a $29,000 revenue in the previous year, indicates a substantial growth trajectory. The company’s focus on per-store profitability and projections for $800 per month per store exemplify a strategic approach to scaling operations. The available capital, comprising the raised $2.2 million, likely plays a pivotal role in supporting TekDry’s expansion plans and maintaining a competitive edge in the market. The company’s financial health and available capital position it favorably to navigate challenges and seize opportunities in the dynamic tech recovery industry.
The Negotiations:
The negotiations for TekDry on “Shark Tank” were marked by a mix of interest, skepticism, and a strategic deal-making process. The founders, Adam Cookson and Craig Beinecke, entered the Tank seeking $500,000 in exchange for 5% of their company, presenting a compelling solution to the pervasive issue of water damage to electronic devices. The Sharks, intrigued by the innovation but concerned about valuation and market challenges, expressed both interest and reservations. Barbara Corcoran bowed out early, expressing doubts about the retail market, setting a cautious tone.
Other Sharks, including Lori Greiner, Mark Cuban, and Robert Herjavec, raised concerns about the high valuation and potential technological advancements making TekDry obsolete. Ultimately, all Sharks, except for Mr. Wonderful (Kevin O’Leary), exited the deal, citing various reasons such as market viability, valuation concerns, and the rapid evolution of technology. Mr. Wonderful seized the opportunity, offering a $500,000 loan at 13%, with a 5% equity warrant. The deal was structured to be repaid in 36 months, showcasing his willingness to provide capital but also secure an equity stake in TekDry’s potential success.
The negotiation concluded with Adam and Craig accepting Mr. Wonderful’s deal, expressing gratitude for the opportunity. The founders emphasized their confidence in paying back the loan, and a touch of humor lightened the atmosphere as they assured Mr. Wonderful that they were not worried about the debt.In essence, the negotiations highlighted the challenges and opportunities associated with bringing a tech-focused solution to market. While some Sharks saw potential pitfalls, Mr. Wonderful recognized the value of TekDry’s unique offering, sealing a deal that represented a strategic partnership between investor and innovators.
