'That sounds like bulls**t': Shark Tank judges slam entrepreneur who got 'ludicrous' financial advice

A BUDDING entrepreneur has been torn apart over a “bulls**t” valuation of her business by the Shark Tank judges, who warned she had been taken for a ride by her accountant.

Darwin saleswoman Heidi Loy entered Tuesday night’s episode seeking a $260,000 investment for 10 per cent of her business Ice Bucket Skins, valuing it at $2.6 million.

Ms Loy’s invention is basically a stubby holder for an ice bucket, keeping it cold without creating any condensation.

“It’s something out there that should have been invented a long time ago,” she said.

“Every Australian will want one of these if they enjoy an ice-cold drink. The problem with ice buckets is condensation. It pools all over the table, it can end up on the floor which is an OH&S risk. The worst-case scenario could be someone slipping over from water on the floor.”

Ms Loy said she had designed the product herself and ordered 1000 from China. She had only sold 200 and given about 100 away, but of the 10 venues in Darwin currently using them she had “nothing but fantastic reviews”.

Tech investor Steve Baxter wasn’t so sure. “Is it actually a problem?” he asked.

Ms Loy said it was something she didn’t think anyone had “actually realised” was a problem. “For me, going out and enjoying a drink with friends, I sit at a bar or at a table, the ice bucket is in the middle of the table, the water’s pooling, it ends up in my lap,” she said.

The Sharks were also concerned about the simplicity of the product.

“You can’t patent simple s**t!” Steve said on learning Ms Loy had spent money on a patent. She clarified that it was “mainly for the material it’s made from” and that someone else could easily create a similar design from a different material.

The real sticking point, however, was the $2.6 million valuation, which drew a particularly harsh response from the normally fatherly figure of Andrew Banks.

“Is there some magic form to this, is there something we’re not seeing?” he asked.

Ms Loy said she had “been to an accountant and he’s actually drawn up my figures”. “He said to me basically I can sell at least 100,000 in the first year,” she said, eliciting cries of despair from the Sharks.

“I’m still waiting for the justification of the $2.6 million valuation,” Andrew said. “You did your spreadsheet with your accountant, but do you have a purchase order?”

Ms Loy confirmed that she didn’t. “When someone says to you your business is worth $2.6 million, and I don’t have a firm purchase order, surely you have this screaming voice that says to you, ‘That sounds like bullsh*t?’” he said.

Asked why she thought she could sell 100,000, she said it was “something that is unique to the market” and sales would come “once I get out there and start actually selling the product”.

She needed the investment because “to sell it door-to-door and individually to pubs and clubs is basically out of the question, it’s too much for me to do”.

Boost Juice founder Janine Allis wasn’t happy with that response. “When you’re an entrepreneur, when you’re starting a business, nothing is too much,” she said.

Greencross founder Glen Richards agreed. “What great entrepreneurs do is race around Australia, lock in all the pubs and clubs that are interested in this product, the next thing you’ve got an open order for at least 10,000 of them,” he said.

Steve asked who the accountant was. “He’s from a worldwide firm,” Ms Loy said.

“Here’s a message to those pillocks,” Steve said. “Please stop giving unrealistic valuations to entrepreneurs. Get real with your bloody valuations.”

Glen said she was a “classic entrepreneur” who “got excited” and had “lots of activity without any execution”.

“I actually love the product,” he said. “If you turned up on this show with purchase orders for $260,000, I would have actually been interested.”

RedBalloon founder Naomi Simson wasn’t happy to hear that Ms Loy had only spent $10,000 of her own money, but was asking for $260,000.

“Often people come and ask for our money as investors yet they don’t put their hand in their own pocket and wouldn’t risk their own capital,” she said. “It’s not the way I want to start a partnership.”

Janine said Ms Loy had only just started on her business journey and she might have success. “But your accountant has done you a disservice because you’ve relied on him to give you advice as an expert and he’s given you terrible advice,” she said. “He had made this pitch today for you uninvestable.”

With all the Sharks out, Andrew had one last jab.

“If you believe someone who gives you a valuation of $2.6 million then I would worry about you as a business partner, because frankly it’s a ludicrous valuation,” he said.

After the pitch, Ms Loy was undeterred.

“I guess I do have a lot more to learn,” she said. “I’m a salesperson, I’m not a businessperson, so I need to get a business hat on. Watch this space, you’ll be seeing my product out there.”

Shark Tank returns to Channel 10 on Tuesday 10 July at 8:30pm.

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