{"id":42119,"date":"2023-10-20T15:18:52","date_gmt":"2023-10-20T15:18:52","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/from-tears-to-rapid-growth-how-a-melbourne-startup-survived-rejection-on-shark-tank-startupsmart\/"},"modified":"2023-10-20T15:18:52","modified_gmt":"2023-10-20T15:18:52","slug":"from-tears-to-rapid-growth-how-a-melbourne-startup-survived-rejection-on-shark-tank-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/from-tears-to-rapid-growth-how-a-melbourne-startup-survived-rejection-on-shark-tank-startupsmart\/","title":{"rendered":"From tears to rapid growth: How a Melbourne startup survived rejection on Shark Tank – StartupSmart"},"content":{"rendered":"
\"Carhood<\/div>\n

Just seconds after facing rejection on Shark Tank<\/em>, a teary-eyed Christian Schaefer promised to prove the esteemed judges wrong and keep working on his startup.<\/p>\n

Airing on Wednesday night, Schaefer and co-founder Steven Johnson pitched Carhood, their airport car sharing platform, but were criticised for the amount of equity they\u2019d already given up in the startup.<\/p>\n

All five judges eventually dropped out in an emotional moment in the tank.<\/p>\n

\u201cWe\u2019re back to square one but we\u2019ll keep working again,\u201d Schaefer said after the show.<\/p>\n

\u201cWe\u2019ll absolutely get the money – one hundred percent.\u201d<\/p>\n

Now, seven months after the episode was filmed, Carhood has received the funding and is rapidly growing around Australia.<\/p>\n

\u201cWe still got the funding,\u201d Johnson tells StartupSmart<\/em>.<\/p>\n

\u201cI understand where some of the sharks were coming from. They didn\u2019t want to be part of multiple rounds, they\u2019d rather just get in and get their exit.<\/p>\n

\u201cIt showed that we sold too cheaply too early on.\u201d<\/p>\n<\/p>\n

Blood in the water<\/h3>\n

The entrepreneurs and long-time friends went into the tank asking for $500,000 in exchange for 11% of the company.<\/p>\n

While the judges like their idea \u2013 a platform allowing travellers to rent out their cars and avoid airport parking fees \u2013 problems arose when it was revealed the pair had recently closed a seed funding round that valued the company at $1.5 million.<\/p>\n

With the new pitch, that valuation had quickly jumped to $4.5 million. The founders projected $12 million in revenue by 2018 with a profit of $3.9 million following international expansion to the UK.<\/p>\n

\u201cI\u2019m calling bullshit on the $12 million,\u201d investor Janine Allis said.<\/p>\n

\u201cI\u2019m struggling to believe it. You have got a billion problems to solve in Australia before you even think about going overseas.\u201d<\/p>\n

Fellow judge Andrew Banks also struggled with how much equity in Carhood was given up early on, saying this will make follow-on funding extremely difficult.<\/p>\n

\u201cYou sold that equity far too cheaply, now there\u2019s a huge stumbling block as a structure,\u201d Banks said.<\/p>\n

\u201cThe first mistake an entrepreneur makes is structuring the business. Once you do that you can\u2019t go any further.\u201d<\/p>\n

An emotional Schaefer described how dedicated he was to the startup.<\/p>\n

\u201cI\u2019ve got everyone on the line, plus everyone I know,\u201d he said.<\/p>\n

\u201cIt\u2019s 100 hours a week since March last year. It\u2019s really hard. If it doesn\u2019t work I don\u2019t know what I\u2019d do.\u201d<\/p>\n

This passion piqued the interest of shark Steve Baxter, but was ultimately not enough to get him over the line.<\/p>\n

\u201cI\u2019m struggling because they haven\u2019t structured themselves well, but they\u2019ve done bloody well to get where they are,\u201d Baxter said.<\/p>\n

\u201cIt should have been for 10% and you\u2019d be so much better set up.<\/p>\n

\u201cI\u2019m so sorry. I regret it already.\u201d<\/p>\n

Johnson says watching the episode when it aired was a difficult experience, but proved to have its own rewards.<\/p>\n

\u201cIt\u2019s not easy when you see your business partner crying on TV, and they were genuine tears,\u201d he says.<\/p>\n

\u201cOur website was going crazy on the night. We had 10,000 people visiting it within the space of half an hour. Our servers were struggling but I\u2019m not complaining.\u201d<\/p>\n

Growth from rejection<\/h3>\n

Seven months ago when the two founders pitched to the sharks, Carhood had 1000 members signed up, had completed 250 rentals and earned $70,000 in revenue.<\/p>\n

In the time since filming, Schaefer has \u201cparted ways\u201d with the company, but Johnson says the startup has been coming into its own in recent times.<\/p>\n

\u201cSo much has changed since then,\u201d Johnson says.<\/p>\n

It now has nearly 6000 members and is on the verge of signing a deal with a \u201cmajor manufacturer\u201d.<\/p>\n

Carhood is also looking to implement a \u201cworld-first\u201d subscription service for regularly work travellers, as well as an offering for SMEs.<\/p>\n

Through the Carhood platform, users can offer their car for rent instead of parking at the airport, earning money through this and saving on the exorbitant fees.<\/p>\n

The startup will also be launching in Sydney in the next couple of weeks.<\/p>\n

\u201cSydney is just prime for us,\u201d Johnson says.<\/p>\n

\u201cWe know it\u2019s going to be a huge success and we already have a lot of signups there.\u201d<\/p>\n

And an international expansion is also still on the horizon, along with a further national push into Perth and the Gold Coast towards the end of this year.<\/p>\n

To fund the expansion plans, the startup has also opened a Series A funding round with an aim to raise about $2 million.<\/p>\n

In terms of lessons or advice from the tank, Johnson says it\u2019s important for founders to look at things from an investor\u2019s point of view and be willing to be flexible.<\/p>\n

\u201cDon\u2019t pitch for a large amount \u2013 you\u2019re not likely to get it,\u201d he says.<\/p>\n

\u201cA lot of founders can get overly attached to the business and fail to see an outsider\u2019s view.<\/p>\n

\u201cAnd educating the market is a bloody expensive task.\u201d<\/p>\n

Follow StartupSmart on<\/em> Facebook,<\/em> Twitter,<\/em>LinkedIn <\/em>and <\/em>SoundCloud.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Just seconds after facing rejection on Shark Tank, a teary-eyed Christian Schaefer promised to prove the esteemed judges wrong and<\/p>\n","protected":false},"author":2,"featured_media":60521,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/42119"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=42119"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/42119\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/60521"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=42119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=42119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=42119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}