You Go Natural – Head Wrap
DEAL
EPISODE SUMMARY
🕓 Air Date: May 5, 2023
Asking For:
$400,000 for 5%
Investor:
Mark Cuban
Deal:
$400,000 for 10% + $3-$5 royalty per unit until loan is paid back
PRODUCT SUMMARY
You Go Natural offers satin-lined, easy-tie headwraps designed to protect and promote hair health, including a silicone-lined swim turban, catering to both style and functionality.
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Background Story
You Go Natural, based in Dallas, Texas, was founded by Monique Little and David Dundas, who are brother and sister. Their journey began when they recognized a common problem faced by people with natural hair – bad hair days and the challenges of protecting their hair from damage caused by harsh fabrics like cotton or polyester. Monique’s background in fashion and David’s expertise in manufacturing came together to address this issue.
Monique and David’s initial idea was to create satin-lined headwraps that were not only stylish but also easy to use. These headwraps are designed to reduce friction, retain hair moisture, and promote hair health. They later expanded their product line to include a swim turban made with silicone lining to protect hair from the damaging effects of saltwater and chlorine. The swim turban quickly gained popularity, amassing over 10 million views on TikTok and selling tens of thousands.
The Product
You Go Natural’s product lineup includes satin-lined, easy-tie headwraps and a swim turban. The headwraps are designed to be stylish, easy to use, and, most importantly, protective of natural hair.
They are made with a super-soft satin lining that reduces friction and retains hair moisture, ensuring the health of the wearer’s hair. These headwraps are perfect for bad hair days, protecting hair during sleep, or adding a stylish touch to any outfit.
The swim turban, a patent-pending design, addresses the issue of protecting natural hair while enjoying the water. It features a silicone lining that keeps hair safe from the harsh effects of saltwater and chlorine, making it ideal for swimming.
Customers can purchase You Go Natural products directly online, with prices ranging from $35 to $48. Manufacturing takes place in Dallas, Texas, with production costs ranging from $4 to $7.
How It Went
The company’s position before Shark Tank
You Go Natural has experienced significant growth since its inception. In 2020, the company achieved $2 million in sales, followed by a remarkable increase to $7.5 million in 2021. In the current year, they are on track to hit $10 million in sales. The company’s customer base primarily builds directly online, with a substantial online presence. They manufacture their products in Dallas, Texas, with production costs ranging from $4 to $7 per item.
Despite high manufacturing costs, the selling prices, ranging from $35 to $48, provide a good profit margin. However, You Go Natural faced financial challenges due to over-ordering inventory and a significant advertising budget of $3 million in 2021. This led to a loss of $2 million that year. Currently, the company has approximately $100,000 in the bank.
Their next major move is expanding to Target in February 2023, with a rollout of 316 stores. To optimize efficiency, they plan to introduce headbands made from remnant turban materials in Target stores as a $10 product while still selling their core product online.
The Negotiations:
The negotiation in the Shark Tank episode started with Monique and David seeking a $400,000 investment for 5% equity in their company. Mark Cuban was the only Shark interested in making an offer. Cuban initially offered $400,000 for 20% equity in the company, expressing concerns about the company’s past losses and the uncertainty involved. However, Monique and David countered with a 12% equity offer for the same $400,000 investment.
Cuban, open to the idea of a royalty agreement, proposed a deal involving a $3 royalty on headbands and a $5 royalty on other products until the loan is paid back, along with a 10% equity stake. Monique and David agreed to this deal, accepting a 10% equity offer with a royalty agreement. Ultimately, the negotiation resulted in Mark Cuban investing $400,000 in You Go Natural for a 10% equity stake and a royalty agreement on product sales. The deal was made to prepare the company for its expansion into Target stores in 2023.
