xCraft Drones
DEAL
EPISODE SUMMARY
đź•“ Air Date: October 23, 2015
Asking For:
$500,000 for 20%
Investor:
Kevin O'Leary, Mark Cuban, Lori Greiner, Daymond John, Robert Herjavec (5)
Deal:
$1,500,000 for 25%
PRODUCT SUMMARY
xCraft's flagship product, the X PlusOne, is a revolutionary drone that combines the hovering precision of a helicopter with the fast flight of an aircraft, capable of reaching speeds up to 60 miles per hour and climbing as high as 10,000 feet.
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Background Story
xCraft, presented by J.D. Claridge and Charles Manning, is a company aspiring to make unmanned flight accessible to everyone. J.D. Claridge, an aerospace engineer, and Charles Manning, with a background in software, joined forces to create the X PlusOne drone. The founders emphasize the new era of unmanned flight and their drone’s ability to seamlessly transition from high-speed flight to hovering, breaking the boundaries of traditional drones.
Their journey began with a vision to redefine aviation, inspired by the Wright Brothers’ historic flight in 1903. With a combination of engineering expertise and software knowledge, they developed a unique drone that addresses the limitations of traditional models.
The Product
The X PlusOne drone is distinct from conventional drones due to its capability to transition to forward flight using a wing, providing both hovering precision and fast flight. The wing, a key component, rotates to enable the transition.
It can reach speeds of up to 60 miles per hour and climb as high as 10,000 feet. The drone’s maneuverability allows it to capture fast-moving subjects like cars or motorcycles. The system can operate autonomously, with users able to create flight plans on a PC software system.
xCraft also introduces another product called PhoneDrone, transforming smartphones into drones using their built-in sensors and components. PhoneDrone is still in development and is expected to retail for around $300.
How It Went
The company’s position before Shark Tank
At the time of the pitch, xCraft had presales of $173,000, with $143,000 from Kickstarter and an additional $30,000 from their website. The production cost of the X PlusOne was $400, and it retailed for $1,800. The founders were seeking $500,000 to scale production, aiming to reduce costs. Their plans included using $250,000 for inventory and scaling the X PlusOne production, and the remaining $250,000 for finishing the development of PhoneDrone.
The founders mentioned licensing opportunities and highlighted their unique intellectual property as a key differentiator. The negotiations resulted in an offer from all five Sharks—Mark Cuban, Kevin O’Leary, Lori Greiner, Robert Herjavec, and Daymond John. The final deal, a syndicate offer, amounted to $1.5 million for 25%, with each Shark contributing $300,000 at 5% each. The founders accepted the offer, expressing excitement about having all five Sharks on board.
The Negotiations:
The negotiations began with a $500,000 ask for 20% equity. However, the Sharks showed significant interest, and the deal evolved into a syndicate offer. Mark Cuban, Lori Greiner, Kevin O’Leary, Robert Herjavec, and Daymond John collectively offered $1.5 million for 25% equity, with each Shark contributing $300,000 at 5% each. The founders expressed their willingness to give up 25% of the company for the syndicate deal, providing a $6 million valuation.
Mark Cuban initially hesitated but eventually joined the syndicate. The founders acknowledged the operational execution experience and diverse expertise the Sharks brought to the table, emphasizing the value of having the Sharks as partners. The negotiation concluded with all five Sharks agreeing to invest $1.5 million for a 25% stake in xCraft. The founders expressed their excitement about the syndicate deal and the prospect of working together.
