“Don’t do that:” When Shark Tank investor Kevin O’Leary advised Nui founders not to give up too much equity

On Shark Tank Season 10 episode 7, Kristoffer Quiaoit & Victor Macias were seeking $300k for 10% of their business, Nui. During their pitch, the founders explained that their cookies contained 1 gram of sugar and were a healthy alternative to cookies that had too much sugar.

The sharks, including guest shark Alex Rodriguez, were impressed by the products and $1 million in sales. He offered $300,000 for 25% equity of the business, upon which Shark Tank investor Kevin O'Leary said the equity was too much. Meanwhile, Alex stated how he would bring value to the company and that the majority of equity was still with the founders. Mr. Wonderful said:

"Alright guys look, twenty-five percent is crazy. I'm asking for a two-and-a-half percent equity. I'm going to give you a massive social, I'm already in this space like crazy and two and a half percent equity is just there so that when you exit I get a tip. Don't do that that's way too much equity, way too much. It's crazy."

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Shark Tank investor Kevin O’Leary shared an important piece of advice with Nui founders

The Shark Tank investor Kevin O’Leary was impressed by the business and the sales; however, he could understand the reasoning behind the valuation. As Kevin was interested in collaborating with the Nui founders, he gave an example of Wicked Good Cupcakes founders. Kevin stated they became millionaires after appearing on the ABC show; he explained:

"Here's the solution rather than fight about valuation 'cause you're going to have a hell of a fight. I'll make you the same offer I made Wicked Good Cupcakes when they stood exactly where you were and they have become multi-millionaires."

The Shark Tank investor advised Kristoffer Quiaoit and Victor Macias not to "fight about valuation" but rather find mutual common ground. Then he placed an offer of $300,000 for 2.5% equity, alongside a $1 royalty until he made his money back, then a $0.45 royalty in perpetuity. Kevin said:

"Here's how it works, it's a dollar a sale, that's the royalty on it until I get my $300,000 back then it drops to 45 cents in perpetuity and I get two and a half percent equity just to be a partner and stay motivated."

He continued elaborating that no shark was willing to give a $3 million valuation and implying it is in both the founders' best interest to agree to the offer. He concluded:

"I'll never pay you a $3 million valuation now nor will any other shark but it doesn't mean you don't have a great business that's the solution. Align our interests there's an offer."

Then, Barbara also made an offer of $150,000 in cash and $150,000 in credit for 15% equity, alongside $0.50 in perpetuity. However, the founders ended up accepting Alex Rodriguez's offer of $300,000 for 25% equity despite hesitating to give up too much equity.

As of 2022, Nui products are no longer available on online platforms, leading the viewers to believe that the company wasn't generating revenue. Seems like the founders have also ventured into different paths; Kristoffer Quiaoit became the co-founder of low-sugar donuts. Meanwhile, Victor Macias had been active on his website, where he sells courses about business and entrepreneurship.

Shark Tank episodes are available to stream on ABC.