Tipsy Elves
DEAL
EPISODE SUMMARY
🕓 Air Date: December 13, 2013
Asking For:
$100,000 for 5%
Investor:
Robert Herjavec
Deal:
$100,000 for 10%
PRODUCT SUMMARY
Tipsy Elves offers fun, witty, and high-quality Christmas sweaters designed to modernize the traditional holiday garment for the whole family.
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Background Story
Tipsy Elves, helmed by Evan Mendelsohn and Nick Morton, emerged from a desire to inject humor and style into the traditional Christmas sweater market. The duo, based in San Diego, California, shared a vision of transforming the outdated and lackluster holiday attire into something modern and entertaining. Evan, a former lawyer, possessed a background in search engine optimization (SEO) and internet businesses. His keen eye for identifying market gaps led him to recognize the untapped potential in the Christmas sweater niche.
Meanwhile, Nick brought e-commerce expertise to the table, having delved into various online ventures. The inception of Tipsy Elves occurred when Evan stumbled upon a notable search volume for Christmas sweaters, indicating a latent demand waiting to be met. Recognizing the opportunity, Evan and Nick embarked on a journey to reimagine the festive garment, infusing it with humor, wit, and high-quality craftsmanship.Their brainstorming sessions birthed the concept of Tipsy Elves, a brand that would breathe new life into Christmas sweaters, making them appealing to a broader audience.
The founders aimed not only to create visually striking designs but also to ensure a comfortable fit and superior quality for their customers. With a blend of Evan’s entrepreneurial spirit and Nick’s e-commerce prowess, Tipsy Elves was born, promising to revolutionize the way people approached holiday fashion. Their commitment to innovation and their willingness to challenge conventions set the stage for their remarkable journey into the competitive world of fashion entrepreneurship.
The Product
Tipsy Elves offers a wide array of Christmas sweaters that blend humor, style, and quality craftsmanship. These sweaters are designed to add a touch of fun and whimsy to holiday gatherings and celebrations. Each sweater boasts unique and eye-catching designs, ranging from classic holiday motifs to playful characters and pop culture references.
Crafted from premium materials, Tipsy Elves sweaters ensure both comfort and durability, making them suitable for festive occasions throughout the season. The sweaters are available in various sizes to accommodate men, women, and children, catering to the entire family’s holiday wardrobe needs.
Customers can purchase Tipsy Elves products directly from their e-commerce website, providing a convenient and hassle-free shopping experience. Additionally, Tipsy Elves has expanded its reach through partnerships with select retailers, such as Urban Outfitters, offering greater accessibility to their unique designs.
While the exact pricing may vary depending on the specific design and size, Tipsy Elves sweaters typically retail for around $65 each. This price point reflects the brand’s commitment to delivering exceptional quality and design, ensuring that customers receive value for their investment in festive attire that is sure to spark conversation and spread holiday cheer.
How It Went
The company’s position before Shark Tank
Tipsy Elves has demonstrated robust growth and a strong position in the market since its inception in 2011. Initially relying heavily on online sales platforms like Amazon, the company quickly gained traction with its unique and humorous approach to Christmas sweaters. By 2012, their sales had reached an impressive $862,000, showcasing the brand’s rapid ascent within the niche market. To further expand their reach, Tipsy Elves ventured into the wholesale market, securing partnerships with prominent retailers such as Urban Outfitters. This diversification strategy aimed to tap into new customer segments while bolstering brand visibility and accessibility.
While the company’s primary focus remains on e-commerce operations, they have strategically explored opportunities in retail. However, they’ve encountered challenges, particularly with managing returns and navigating the seasonal nature of their products. In terms of funding, Tipsy Elves primarily relies on external investments to fuel their growth. During their appearance on Shark Tank, they secured a $100,000 investment from Robert Herjavec in exchange for 10% equity in the company. This injection of capital provided the necessary resources to support their expansion plans and further solidify their position in the market.
Despite facing the occasional setback, Tipsy Elves remains committed to delivering high-quality products and maintaining a strong brand identity. Their customer base consists of individuals seeking to add a playful and festive touch to their holiday wardrobe, with a particular appeal to younger demographics and those with a penchant for quirky fashion. Overall, Tipsy Elves is structured as an e-commerce-centric company with a growing presence in wholesale distribution. Their strategic partnerships, coupled with continued investment and a focus on innovation, position them for continued success and expansion within the holiday apparel market.
The Negotiations:
During the negotiations on Shark Tank, Tipsy Elves founders Evan Mendelsohn and Nick Morton presented their pitch seeking a $100,000 investment for 5% of their company. They showcased their unique line of Christmas sweaters, highlighting their humor, quality, and growing sales figures. Despite the Sharks’ initial skepticism towards the product’s potential, the founders managed to capture their interest with their impressive sales numbers and innovative approach to holiday fashion.
The negotiations saw two Sharks making offers to invest in Tipsy Elves. Kevin O’Leary offered $100,000 for a royalty deal, where he would receive $2 per sweater until his investment was recouped, followed by $1 per sweater in perpetuity, without taking any equity in the company. On the other hand, Robert Herjavec proposed a straightforward investment of $100,000 for a 10% equity stake in the company.
Ultimately, Evan and Nick accepted Robert’s offer, valuing his expertise and willingness to take a stake in the business. While Kevin’s royalty deal offered an alternative funding option without diluting their equity, the founders recognized the long-term value of having a strategic partner like Robert on board. The negotiations showcased the founders’ ability to navigate offers from multiple Sharks and make a decision that aligned with their vision for Tipsy Elves’ future growth and success.
