Honeyfund Before Shark Tank
When Josh and Sara Margulis, from Sebastopol in California, were planning their wedding, they looked for a website that would allow their wedding guests to contribute to their honeymoon, instead of giving them gifts they didn’t really want or need. They didn’t find any sites catering for that area, so they created one, Honeyfund, for their own personal use.
The idea was a resounding success and the newly wed couple, already hoping to go into business together after they were married, thought it was the perfect venture for them to found their own business. By offering the same service to other future brides and grooms, it worked in much the same way as a traditional crowd funding site, but centered around honeymoon trips instead. The soon-to-be couple would post their intended honeymoon plans, and guests could contribute towards the cost of it.
Satisfied customers spreading the news of a great company has always been a sure fire way to increase business, but for Josh and Sara, one satisfied Honeyfund customer happened to be a Shark Tank insider, and in 2014, the couple found themselves invited to appear on the show.
Honeyfund On Shark Tank
When Sara and Josh appeared on the show, in October of that year, they were seeking $400,000 in exchange for 10% equity in their business.
Josh began the pitch by explaining about their unconventional honeymoon arrangements, and the surprising success of the website they set up for the purpose. Sara described the Honeyfund business as a free honeymoon registry service. She explained that it could allow newly married couples to afford that dream honeymoon, that they wouldn’t be able to afford otherwise. Josh spoke about the benefits to guests, who wouldn’t be stuck trying to buy a suitable wedding gift in a limited number of stores.
‘Would you rather give someone a blender, or a night in a beach bungalow?’ asked Sarah
After a few more words about the joys of Honeymoons, the Honeyfund couple expressed a desire to get the sharks in a honeymoon mood. They presented a Lei, that traditional Hawaiian garland, to each shark, along with the preferred drink of the newly married everywhere, a coconut cocktail.
They proposed a toast to the Sharks, and Kevin O’Leary agreed.
‘To cash flow!’ he declared, raising his coconut in salute.
After a quick sip of his cocktail it was straight to business for Robert Herjavec. He inquired how long the company had been in business, and what the sales had been to date. Sara explained that the success of their own honeymoon funding site, where they had achieved funding of over $5,000, had so impressed them, that they had began operating the Honeyfund business immediately after their own wedding. In the ten years since then, they had funded over $200 million for other couples honeymoons. It was an admirable figure and all the sharks were suitably impressed.
The Honeyfund service, unlike other crowd funding sites, was free to its users. Kevin O’Leary asked where the couple made their money. Josh disclosed that they had an agreement with Paypal, where they would receive a percentage of the funds as a commission, due to the high value business they put through the online transaction business.
Robert asked what profits they had achieved in the last year. Josh confirmed that the Honeyfund business had processed $67 million in transactions, and the income from Paypal had amounted to $987,000. Robert wanted to know what the net profits, after costs, had been. Sara confirmed that the couple had made $217,000 in the previous year.
Kevin spoke about acquisition costs and pushed for more detailed information about the numbers. Sara was quick to answer all his points and was quickly proving herself a formidable force, even when under considerable pressure.
Mark Cuban thought the business wasn’t suitable for investment. He called the turnover, of less than a million dollars, ‘Horrible’.
Sara answered him in the same cleared headed manner. She smoothly explained about the companies expansion into Plumford, a new crowdfunding site that could be used for any purpose, rather than just honeymoons. She explained about the long-term strategy of the business, namely to eventually provide a portfolio of funding sites, providing similar services to a selection of demographics. She explained about the Spanish version of Honeyfund, she asserted that just that one platform alone could double the companies turnover, with the custom of the millions of Spanish speakers in the country.
Kevin O’Leary still had an issue with the valuation, it was too high in his opinion. Sara was once again on the ball, she explained that the valuation had been based on the growth of the company, and the projected sales patterns.
‘How are you going to grow?’ Kevin wanted to know.
Sara explained that the portfolio of new funding sites would grow the business exponentially as they each became a better known brand. She stayed calm under Kevin’s relentless piercing gaze.
Lori Greiner liked the business, and she liked the happy partnership, both personal and professional, of the entrepreneurs. But she believed that the crowd funding market was simply too crowded itself. And for that reason, she was out.
Mark Cuban was also uninterested, but for different reasons. He thought the acheivements of the couple so far were admirable, but he didn’t see the business as scalable any further. He didn’t believe the couple had a solution to the inevitable stagnation of their business at its current level, and he was out too.
Robert made the couple their first offer, he offered $500,000, more than their requested investment, but he required a 50% share in the business in return.
Kevin O’Leary was quick to offer an alternative. He offered $400,000, but surprisingly for Kevin, he wanted no share of the business in exchange. Instead he wanted his investment returned three times over, and once he had received $1.2 million, he would be gone and Sara and John would give up nothing.
Barbara Corcoran asked what he would do for the couple, and he asserted he would invest in them. Barbara told the couple they had met a banker in the tank that day, but Mark Cuban defended Kevin’s offer, calling it the best offer Kevin had ever made.
Barbara called Kevin’s offer ‘A phony royalty deal’. In return Kevin accused her of having no creativity.
Robert joined in the attack on Mr Wonderful, he opined that all Kevin cared about was ‘Getting his money back’. ‘Of course I do’ agreed Kevin cheerfully.
Robert asserted that rather than just investing in the business, he would help Honeyfund grow into new areas and markets, he added ‘I don’t invest in companies to get my money back at all costs, I invest to help them grow quickly’.
Barbara Corcoran had a third offer for the couple, she would supply the $400,000 in exchange for only 30% equity in the business. Robert was not going to be pushed into the shadows and he instantly matched Barbara’s proposal.
Lori asked what Josh and Sara were going to do. A very quick consultation later Josh asked if Robert would be prepared to reduce his share to 25%, however, Robert wasn’t going to agree to that.
‘That’s ridiculous, you’re going to argue over a 5% deal? We don’t want to start like that’ he said, somewhat coldly compared to his usually friendly style. Robert showed his teeth, but he wasn’t smiling.
There was just a moments consultation between the couple before they reached a whispered conclusion. Turning to Kevin, Sara confirmed ‘Mr O’Leary we have a deal’ and Kevin got up to shake on it. After the show, Sara and Josh expressed their belief that they had just got the best deal from Kevin that he had ever offered. The other sharks bantered playfully with Kevin, but he didn’t let it get to him. Instead he informed them he would invoice them, as he had just taught them something about business.
Honeyfund Now in 2018 – The After Shark Tank Update
In an interview in late 2015, Sara and Josh revealed that things had gone rather well in the year since the show had first been aired. Kevin O’Leary clearly recognised Sara’s abilities to remain calm and focused under pressure, and he appears to have built on those strong foundations to become an invaluable asset to the Honeyfund business.
Kevin has supported the company at media events and has opened the door for Sara to start publishing her own articles in The Huffington Post, where Kevin himself frequently writes. Sara discusses issues relating to the wedding industry and business leadership in general, and she has built up a small, but growing, personal following through her intelligent and thoughtful articles.
Kevin’s long standing support of female business leaders is well documented, in an interview in April 2016 he revealed that the majority of the companies in his private portfolio, with consistently excellent sales records, are run by women. He believes that women mitigate risks more effectively, and set achievable and realistic goals for their employees. His progressive attitude, as always with Kevin, is based purely on the proof of the numbers. This time, his intuition has enabled a dynamic partnership. Sarah has described the outcome of her appearance on Shark Tank as phenomenal, and Kevin’s continued support as outstanding.
Of course, there’s always the added bonus of increased interest in a business after the Shark Tank, no matter what the eventual result of negotiations is. Sarah revealed that Honeyfund had increased its user base by a huge 45%, and the $200 million raised in a decade before Honeyfunds appearance begins to look small and insignificant when compared to the $100 million raised through the site in the year after the show. Sarah was confidently predicting profits of $2 million for 2015. Plumford has shared in the success too. Traffic to the site has increased by 200% and it is beginning to make headway in that bustling crowd funding market.
But Kevin O’Leary has even bigger plans in store for the company. In a segment in October 2015, in season 7 of the show, Kevin officiated at the wedding of close friends, and he took the opportunity to announce the launch of his ‘Something Wonderful’ platform. The new strategy would combine the services of Honeyfund with two of Kevin’s other Shark Tank investments, Bottle Breacher and Wicked Good Cupcakes, to provide support for each business from the other two.
Kevin received a large amount of positive press coverage due to his surprising role in the ceremony, and his assertion that he was ‘A lover of love’. Perhaps the luxury of being able to relax about his Honeyfund investment, knowing that the capable Mr and Mrs Margulis are firmly behind him, has mellowed Mr Wonderful out a little. Or perhaps it’s all that money they’re all making. Between the young married entrepreneurs and Kevin O’Leary to guide them, it really is a match made in Heaven.
what firm built honeyfund site?