Shark Tank made history on Friday by closing the largest deal in the show's six seasons, but co-host Mark Cuban wanted nothing to do with the single-serve wine company Zipz.

Entrepreneur Andrew McMurray came to the tank seeking $2.5 million for 10 percent of Zipz, which makes a wine-by-the-glass product covered in a wrapping that protects against UV rays, preserving the shelf life of the wine until the package is opened. 

"In single-serve wine, shelf life is king," McMurray said. "In our opinion, our packaging is going to become to the wine industry what the aluminum can became to the soda industry."

With $8.5 million raised from 25 backers, including six former Goldman Sachs partners, McMurray had already persuaded many professional investors that his product was a winner. Despite the company's $650,000 in sales in just 16 months, Cuban took issue with the product's branding.

"I'm not a wine connoisseur, but even then, I would drink MD 20/20 from a quality perspective over a brand with a zipper named Zipz," he said. "Huge mistake. I'm out."

 inline image

FUBU's Daymond John also had reservations about plunking $2.5 million into an untested business.

"My gut feeling is I would not feel comfortable investing this amount of money with this amount of risk," he said.

Co-host Robert Herjavec saw value only in licensing the product to wine companies--a completely different strategy than what McMurray had in mind. Co-host Lori Greiner considered the deal too complicated and crowded.

Kevin O'Leary, however, saw Zipz as an opportunity to get his existing wine company, O'Leary Fine Wines, into Costco, the largest wine buyer in the world. His offer, however, came with a number of contingencies.

"I'll give you $2.5 million for 10 percent, but I want the option to buy another $2.5 million worth of equity at exactly a $25 million valuation in the event of an exit, which means if you sell the company for $50 million, I still get to buy in at $25 million," he said.

"I've got to have some upside for making your company so valuable that you can sell it, and of course all of this only happens if you get into Costco, so you have nothing to worry about."

After a quick call to his partners, McMurray accepted the offer and made Shark Tank history, raising the value of the show's largest-ever investment from $2 million--given to horror-attraction company Ten Thirty One Productions--to $2.5 million.

While four of five sharks considered the deal too risky, O'Leary's offer proved that with the right strategic partner, even a company with a quirky name like Zipz can be a potential home run.