David and Randy from Bombas pitched their innovative athletic sock brand to the Sharks, seeking $200,000 for 5% equity, emphasizing product improvements and a one-for-one charitable giving model.
The founders reported $450,000 in sales over nine months, with projections for rapid growth, and highlighted their unique approach with no spend on advertising to date.
Most Sharks declined the deal due to concerns around valuation, scalability, and margins; however, Daymond John ultimately offered $200,000 for 17.5% equity, plus to finance inventory, which the founders accepted.
Key decisions centered on valuation adjustment and inventory financing, ensuring both immediate capital and operational support for Bombas.
Action Items
Daymond John: Arrange financing for Bombas' inventory as agreed in the final deal.
David & Randy: Begin preparations and coordination with Daymond John to operationalize the partnership and implement growth plans.
David & Randy: Use the $200,000 investment to selectively hire key team members and focus on customer acquisition strategies.
Bombas Pitch & Product Overview
David and Randy presented Bombas socks, emphasizing seven technical improvements over conventional athletic socks, including higher-quality materials and better design features.
Their business model includes donating a pair of socks for every purchase, addressing a major need in homeless shelters.
The socks are sold exclusively online at $9 per pair, with a 54% profit margin after including the donated pair.
Sales Traction, Margins, and Growth Plans
Achieved $450,000 in sales in nine months without any advertising spend, relying exclusively on word-of-mouth.
Planned to finish the year at $1.1 million in sales, with projections of $2.7 million in the following year.
Average margin is 54%, shipped to customer, including the donated pair of socks.
Acknowledged recent plateau in monthly growth due to focus on fundraising, with plans to use new funds to hire marketing and customer acquisition talent.
Investor Feedback & Concerns
Sharks raised concerns about high valuation ($4M), scalability of word-of-mouth growth, and relatively low margins compared to other social good businesses.
Some Sharks exited due to skepticism about the market size, competitive differentiation, and the business’s ability to stand alone as an online sock brand.
Deal Negotiation
After initial rejections, the founders reduced their ask to $200,000 for 10% (then 15%) equity specifically to work with Daymond John.
Final negotiated agreement: $200,000 investment for 17.5% equity, with Daymond John financing all inventory needs.
The founders accepted these terms, declining to seek further advice from their CFO per Daymond’s request.
Decisions
Accept Daymond John’s offer of $200,000 for 17.5% equity, plus inventory financing — founders agreed to this deal to secure a strategic partner and immediate operational support.
Open Questions / Follow-Ups
Specific next steps for inventory financing arrangement between Bombas and Daymond John.
Detailed allocation plan for the $200,000 investment, particularly regarding hiring and marketing spend.