Viewers of ABC's Shark Tank are used to seeing entrepreneurs make grandiose claims. But when Brian Shimmerlik told the sharks on Friday's episode that his company had raised $3.4 million from "some of the best investors out there," there was some truth to the statement.
That's because his list of investors includes social media expert Gary Vaynerchuck, Zappos CEO Tony Hsieh, Techstars co-founder Brad Feld, and rapper Nas. And now, his company's backers include Shark Tank's Kevin O'Leary and Lori Greiner, who are in for a $2 million loan.
Shimmerlik's company is Vengo Labs, a Long Island City, New York, maker of mini-vending machines, called Vengos.
"I would put our group of investors against anybody else's in the world," Shimmerlik told Inc. "[We] worked really hard to make sure that people's faith in us was well-rewarded."
Vengos, approximately the size of a large picture frame, are sold to vending machine distributors, who pay $20 per month to gain access to the Vengo Labs software. Then, Vengo Labs recruits companies to either advertise on the video screen that appears on the Vengo machine, or to sell their products in Vengos (which will cost the company $200 per SKU per machine). The company's customers include Hershey's, skincare brand Keihl's, and cosmetics company Revlon.
Shimmerlik, 32, who is the company's CEO, came up with the idea while at New York University. Originally, he wanted to create a machine for taxi cabs that would dispense snacks. He submitted the idea for his taxicab vending machine, then called TaxiTreats, in the New York City Next Idea competition in 2012. Shimmerlik took home first place and $17,500. He used the prize money to create a working prototype, alongside co-founder Steven Bofill, 32, a former aerospace engineer (a third co-founder, Abuhena Azad, is no longer with the company).
With a prototype in hand, he was able to secure a $1 million seed round, led by New York City-based angel investor Joanne Wilson, whom he met through connections he made at the Next Idea competition. From there, Wilson introduced him to Techstars's Feld, who introduced him to angel investor David Tisch, who introduced him to Vaynerchuk.
But even this group of investors couldn't save Vengo Labs from the sharks' bite. When Shimmerlik described his group of investors as "some of the best in out there," O'Leary retorted: "The best investors in America are right here in this room." And shark Robjert Herjavec found Vengo Labs's joint concentrations on selling advertisements and selling vending machines too complicated.
O'Leary and Greiner thought that the company had traction and offered Vengo Labs a 7 percent loan over 36 months in exchange for a small stake in the company, which Shimmerlik negotiated to 3 percent down from 6 percent.
Shimmerlik says while his experience pitching to high-profile investors helped him stay calm during Shark Tank, any contestant should prepare for their pitch the same way.
"You want to prepare under suboptimal conditions," Shimmerlik says. "That way, when things don't go your way, you're calm, cool, and collected, and you just keep rolling."