Jumping Out of the Tank

Recently, twenty-seven-year-old Iris Smit made headlines by being named in Forbes Asia’s 30 under 30 list. Her decision four years ago to decline investment offers during her appearance on the Australian version of Shark Tank has proven wise. Iris sought investors for her beauty brand, The Quick Flick, which features innovative products like a beauty fridge and adhesive eyeliner for false lashes.

Despite being a fledgling business, Quick Flick was already generating $100,000 in monthly revenue. The sharks were impressed, particularly with her profit margins—each product cost her $5 to produce, selling for $35. One shark, Andrew Banks, offered her $300,000 for a 25% equity stake, a tempting proposition for many.

However, Smit, only 23 at the time, chose to trust her instincts and turned down the offer despite pressure from family and friends. She felt secure in her cash flow and had multiple retail agreements lined up. Smit stated, "I didn’t want to limit my career or lock myself in, and the thought of signing the deal made me anxious. I trusted my gut."

Today, Quick Flick generates an impressive $15 million in annual revenue, affirming Smit’s decision.

Exploring the Silicon Startup Scene

"I wish Silicon Valley didn’t glorify massive fundraising rounds as much as they do. People don’t appreciate how much one individual can achieve." - Moiz Ali, Founder of Native.

Silicon Valley is synonymous with startups, where aspiring entrepreneurs flock to secure funding from angel investors, all vying to become the next unicorn. When Moiz Ali launched his natural deodorant brand, Native, he felt out of place amidst the funding frenzy. He reflected, "In Silicon Valley, it’s often embarrassing when you haven’t raised money."

However, not relying on outside capital turned out to be beneficial for Native. With limited funds, Ali kept his team small, carefully planned marketing efforts, and prioritized customer satisfaction—ensuring each sale was profitable. This approach starkly contrasts with many Silicon startups that prioritize growth at the expense of profitability.

Thanks to this strategy, Ali sold Native to Procter & Gamble for $100 million in cash within just two and a half years, while owning 90% of the company. Had he sought large initial funding, this success might not have been possible.

The Importance of Reevaluating Investment Choices

Investment decisions merit careful reconsideration. For instance, in season two of Shark Tank USA, Joseph Moore pitched his company, First Defense Nasal Screens. He sought $500,000 for a 10% stake and had secured a significant overseas contract. Despite receiving multiple offers, he chose a loan offer from Mark Cuban, Kevin O'Leary, and Daymond John, totaling $750,000 for a 30% stake plus 10% royalties indefinitely.

After filming, Moore reassessed and decided against the deal. This choice proved to be prudent, as First Defense now holds patents in over 50 countries and is valued at $50 million—significantly more than its initial $5 million valuation.

John’s Role in My Journey

Reflecting back on the decision to decline John’s partnership, I observed an interesting outcome. In 2020, I decided to shift my focus and pursue a solopreneur path, aiming to sell my share of the business to my co-founder. The process was complex, involving extensive negotiations over the buyout price, particularly regarding the business's 'goodwill'—an intangible asset not reflected on the balance sheet.

As negotiations stretched on, we turned to John for guidance. His deep understanding of the business and active involvement helped us arrive at a fair price for the goodwill. Ultimately, rejecting his offer to invest facilitated a successful exit from my business.

Saying no to funding can be immensely challenging. However, as these stories illustrate, sometimes pursuing an independent path can lead to even greater success.