Booth Training Helps Student on 'Shark Tank'
March 06, 2015
Entrepreneurs, before you take on the bright lights and big egos of the hit TV show “Shark Tank,” you’d better be ready for anything. Pitching to five investors in front of millions of viewers will test your nerve, but student Andrea Sreshta didn’t flinch during her nationwide close-up.
Sreshta and her partner Anna Stork, founders of the inflatable-light start-up LuminAID, emerged from the show with an investment deal worth up to $500,000.
Sreshta in a recent interview with Chicago Booth Magazine credited her experiences at Chicago Booth for preparing her to quickly analyze five offers of funding—a skill rarely displayed by the hopefuls that pitch to the sharks. The partners choice was a good fit for the small but growing company, which had $1 million in sales in 2014, Sreshta said.
Chicago Booth Magazine: Your segment on the show lasted 10 minutes. How long did the taping take?
Sreshta: The pitching and subsequent negotiation lasted about 45 minutes. Being on “Shark Tank” was a lot of fun. I thought we would have been nervous, but we prepared a lot.
Sreshta: We spent a month, every day in addition to working on our business, focused on what we were going to do if we had an opportunity to be in the Tank.
I asked Booth classmates and friends to come to the Gleacher Center and pretend to be the five sharks and stress test us, help us prepare for those questions we may not have seen coming. They would give us two or three hours in the evening. They asked us a lot tougher questions than the sharks did. I’m not surprised because Booth’s motto is “Question everything.”
That went a long way toward taking the edge off, so we were just focused on answering the questions, focusing on the salient points of our business, and going back and forth with the sharks.
CBM: You had offers from all five investors, ranging from equity stakes to a royalty deal. Why did you choose Mark Cuban’s offer of $200,000 for 15 percent plus an option to lead the next investing round with $300,000?
Sreshta: What we’re really looking for is a strategic investor. The money has to be attached to someone that is invested in your business not just because of the profit upside but also because of the knowledge they bring to the table that can grow your business in the same way that funding would. We wanted to work with somebody who can help us differentiate our brand and help us stay competitive.
The deal with Mark Cuban can help us grow the sales organization behind our product, do more outreach around the world to increase our distribution network, and finance manufacturing and production when we start seeing more demand.
CBM: How do you tell a good offer from a great offer?
Sreshta: I think it’s where you are with respect to your business, where you want to go. We knew that we had more ideas that we wanted to roll out under LuminAID. In contrast to that, it’s perfectly fine to say, “I am an inventor. I want to invent things but I don’t want to market them.” For those types of arrangements, licensing deals make perfect sense. There’s no one right answer, but it has to hit on the objectives of where you want to go.
CBM: In 2012, LuminAID won the John Edwardson, ’72, Social New Venture Challenge (SNVC), the business launchpad program run by the Polsky Center and the Social Enterprise Initiative at Chicago Booth. How did that change things for you?
Sreshta: In a lot of the competitions we had done before, you enter your business plan, present to judges, and then awards are given. The added value of the way that Booth runs its business plan program is that for 10 weeks, you hone your business and marketing plans during a Spring Quarter class and continue to test them with your professors, your classmates, and a host of people who are giving their resources to the program.
Winning the SNVC gave me a lot more exposure to the alumni network. I’ve had so many people come to me with new opportunities, new ways to help.
CBM: How else has the Booth community helped?
Sreshta: My Booth classmates have been a huge source of support these past couple of years. I couldn’t be luckier to have been surrounded by a bunch of highly intelligent people giving me really smart feedback on high-level things about the business. They’re also not afraid to get their hands dirty doing all the little things that need to happen when you have a small but growing business.
And as we’ve been growing, the Social Enterprise Initiative is with us every step of the way to provide support and resources. SEI worked with the Offices of Alumni Relations and Advancement to find us a small office space downtown (Chicago). That’s a good example of martialing resources for the small businesses and start-ups at Booth.
If you’re thinking about where you might want to go to business school, Booth has an amazing program that’s structured towards allowing people like me who have start-ups to take flexible time to run their business and also finish your full-time program on your own terms.
The school has a real understanding of the nature of starting a business and how unexpected challenges and new opportunities can find their way to you at any given time. The “Shark Tank” experience is a good example of that. I knew I was going to need to take time off to film, to take time off to prepare, and now to take time off to field the opportunities that are coming our way. I have the flexibility to return to Booth and finish when I’m ready.—Eric Gwinn