$142.5B 2015 U.S. ad spending for 200 LNA
One of the largest deals to ever close on ABC's entrepreneurial hit show "Shark Tank" has everything to do with a vending machine that serves both Reeses Peanut Buttercups and digital ads.
Vengo Labs founder and CEO Brian Shimmerlik wrangled up a $2 million deal with investors Kevin O'Leary and Lori Greiner on an episode that aired Friday night. Mr. Shimmerlik went toe-to-toe for about five minutes with Mr. O'Leary and Ms. Greiner before accepting a deal.
The CEO and his co-founder, Steve Bofill, secured $2 million in venture debt that will be paid off over three years with a 7% interest rate. In return, the investors will each receive 3% of the company.
The original deal asked for $2 million for 12% equity, valuing the company -- which made $1 million in revenue last year -- at about $16 million.
Vengo is finding success as brands like Hershey and Mondelez are facing declining sales in the impulse aisle at grocery stores. The cashless vending machine hangs on a wall and holds six products that it advertises.
Purchase a Reeses Peanut Buttercup, for example, and watch a brief ad from Hershey's while you wait for the machine to fetch your product. Each time a sale is made, both brands and Vengo are notified. The machine can also relay where the consumer touched the screen and provide additional insights as well.
The machines are at locations like New York University or Hyatt Hotels. "We are setting up outside where these people spend their time," Mr. Shimmerlik told Ad Age. "We are able to adjust content and messaging in real time based on where the media and product are taking place. The messaging can be very targeted."
ABC declined to share where Vengo's deal ranked when compared with others, stating that "terms are confidential as we are not privy to the deal settlements." A quick search, however, shows that Vengo ranks as the second largest deal ever secured on "Shark Tank," just behind the wine company Zipz, which secured $2.5 million in 2014.
Vengo makes its revenue by selling each machine to vending companies like Canteen for $2,500, or about the same as what it cost for Mr. Shimmerlik's company to make the machines. Each brand, however, pays Vengo $200 a month per product, per machine. Mr. Shimmerlik said about 1,000 Vengo machines will be deployed before the end of this year.
The company, which launched in 2012, won $17,500 in a 2012 competition called "NYC Next Great Idea." Mr. Shimmerlik said he originally had his heart set on securing a deal with Fubu founder Daymond John. "We were hoping for Daymond because he is from Queens and we worked out of Queens," he said.
Other investment partners for Vengo include Gary Vaynerchuk, Tony Hsieh, David Tisch and rap mogul Nas.