The fifth episode of Shark Tank saw three sharks swarming over a crowdfunding business that has the wedding market cornered.
Married couple Josh and Sara Margulis co-founded Honeyfund.com, a free honeymoon registry site, in 2006, and hit nearly $1 million in revenue during the past year. The company helps engaged couples raise money for their honeymoon and has processed more than $235 million in total gifts. Unlike the majority of crowdfunding sites, Honeyfund doesn't take a cut of the funds raised, and requires no approval process for campaigns.
"It’s much more simple and it really focuses on that relationship between the couple and their friends and family," says Sara.
Honeyfund makes money through a partnership with PayPal, and by offering premium versions of its free crowdfunding service. "It’s really geared toward crowdgifting, so any kind of happy life event," says Sara, adding that the company recently created a separate site called PlumFund, which allows people to raise money for virtually anything. "We started this platform really just to test out the concept of this kind of registry for other life events, and it’s been a success so far," she says.
The Margulises came to Shark Tank seeking $400,000 for a 10 percent stake in their company, and wound up fielding three unique offers from the sharks. Robert Herjavec threw out the first bid, offering $500,000 for 50 percent of the business. Kevin O'Leary offered $400,000 for a royalty deal where he would be paid back $1.2 million but would not take any equity in the company. Barbara Corcoran said she'd pay $400,000 for a 30 percent stake, an offer that was quickly matched by Herjavec.
In the end, the Margulises took O'Leary's offer, citing his transactional expertise and connections that could lead to new partnership opportunities.
"We didn’t want to give up 30 percent of our business and Robert [Herjavec] wasn’t willing to budge, although we had countered him down to 25 percent," says Sara.
Next up for the Margulises is a Spanish version of Honeyfund called Fondo de Miel, which Sara says will help put the company on track to double its profits next year, not to mention the added boost from being on Shark Tank.
"We see it growing very, very sharply from this exposure," she says.
Stay tuned for more recaps every week.