{"id":43272,"date":"2023-10-20T15:27:22","date_gmt":"2023-10-20T15:27:22","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/sydney-startup-you-chews-scores-125000-on-shark-tank-what-its-founder-would-have-done-differently-startupsmart\/"},"modified":"2023-10-20T15:27:22","modified_gmt":"2023-10-20T15:27:22","slug":"sydney-startup-you-chews-scores-125000-on-shark-tank-what-its-founder-would-have-done-differently-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/sydney-startup-you-chews-scores-125000-on-shark-tank-what-its-founder-would-have-done-differently-startupsmart\/","title":{"rendered":"Sydney startup You Chews scores $125,000 on Shark Tank: What its founder would have done differently – StartupSmart"},"content":{"rendered":"
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When You Chews founder Liz Kaelin walked down the Shark Tank <\/em>hallway, with superimposed sharks circling over her, she wasn’t expecting to come away with any money.<\/p>\n

Even after delivering a strong pitch for her catering startup and receiving an offer from high-profile tech investor Steve Baxter, she still didn’t think she’d be walking away with funding.<\/p>\n

“I didn’t go on the show thinking I was going to get any money at all, and I was so caught off guard by getting an offer,” Kaelin tells StartupSmart.<\/em><\/p>\n

Baxter’s offer was for the full $125,000 that the Sydney entrepreneur had gone in asking for, but for 12.5% equity in the startup, a big leap from the 5% originally offered.<\/p>\n

After consulting with her co-founder, Kaelin knocked back the deal, but was eventually convinced by the other sharks to take it.<\/p>\n

And despite never really even considering the prospect of walking away with funding, Liz Kaelin walked back down that same hallway an hour and a half later with a $125,000 deal in the works.<\/p>\n<\/p>\n

The pitch<\/h3>\n

The Shark Tank <\/em>episode featuring You Chews aired on Wednesday night but was shot eight months ago.<\/p>\n

You Chews, an online marketplace allowing users to order catering for workplaces from a curated list of local food vendors, gained approval from the sharks for its concept, but was criticised for its revenue and the valuation of $2.5 million that the offer placed on it.<\/p>\n

At the time, the startup had generated $370,000 in revenue across two years of operation, but the investors quickly pointed out that due to the company taking only a 15% cut of the sales, this figure was actually $56,000.<\/p>\n

This, along with various execution risks, led all the sharks except for Steve Baxter to drop out.<\/p>\n

The Brisbane-based entrepreneur and tech investor loved the business concept, but questioned the number of partners it had signed up, with only 35 coming on board in two years.<\/p>\n

“I think this is fantastic, I’m tired of going to boardroom lunches where you get sandwiches or wraps,” Baxter said.<\/p>\n

“But that’s not exactly runaway success.”<\/p>\n

Kaelin attempted to justify this figure by saying it’s easier to work with a small number of partners that can do several orders, but this didn’t go down well with Baxter.<\/p>\n

“You might have just snatched defeat from the jaws of victory here,” he said.<\/p>\n

Negotiations turned to valuations, an area which Kaelin says she finds especially confronting.<\/p>\n

“I’m a scientist, I’m used to rote learning and with valuations it’s more of an art than a science,” she says.<\/p>\n

“Everyone says your valuation is what you convince people your valuation is, and that’s really hard.”<\/p>\n

Baxter’s counter-offer valued You Chews at $1 million, the same valuation that was placed on the startup 10 months early in a seed funding round.<\/p>\n

Believing the startup had grown a lot in this time and more than doubled its revenue, the co-founder rejected this deal, but was ultimately convinced by the other sharks about the value Baxter would add to the business.<\/p>\n

You Chews secured the $125,000 in funding from Baxter in exchange for 12.5% of the company.<\/p>\n

Despite the criticisms and uncertainty, Kaelin says her time in the tank was useful far beyond just the capital injection.<\/p>\n

“It was such an incredible experience and the sharks were so lovely,” she says.<\/p>\n

“They’re incredibly switched on and incredibly insightful. They asked really sophisticated questions that I hadn’t gotten before.<\/p>\n

“It was an incredibly enriching experience just to have been in the room getting that strategic advice.”<\/p>\n

The importance of confidence<\/h3>\n

Eight months later, the funding deal is still in due diligence and Kaelin says things are just getting started for You Chews.<\/p>\n

“We’re changing our brand thanks to the new opportunity that Shark Tank <\/em>has afforded us,” she says.<\/p>\n

“We’re going to reviatlise our business. Our new brand is very much aligned with our new strategy, new business and new focus on customer service.<\/p>\n

“What we learnt is that we focused a lot on the food in the beginning and the people making the food. We’ll still do that but the new brand is really focused on the customer service aspect.”<\/p>\n

Although she’s ultimately happy with the deal she secured, Kaelin says there’s one big thing she’d change about her time in the tank.<\/p>\n

“Looking back, the biggest thing I see in that pitch was confidence – I was so unsure of what the valuation even was and I didn’t really back myself,” she says.<\/p>\n

“If I could do it again I’d make a decision and stick to it, and I’d back myself and have confidence.”<\/p>\n

“I knew I had a shit hot business that was going to take a lot of work but it was completely doable to get to those projections.<\/p>\n

“But I didn’t have the confidence to think this is what I’m worth. Maybe I would’ve got a better deal if I did. But we still did a very good job.”<\/p>\n

This self-doubt is still hovering over You Chews’ Shark Tank <\/em>deal.<\/p>\n

“Even going through the due diligence, the reason that has taken a long time is because I’ve been unsure,” Kaelin says.<\/p>\n

“Is this the right decision? Is he the right investor? That’s the worst thing you can do as an entrepreneur.”<\/p>\n

It’s important for other founders and entrepreneurs to stick to their guns even in the face of five imposing investors and inevitable mistakes, she says.<\/p>\n

“We’re making wrong decisions all the time,” Kaelin says.<\/p>\n

“As entrepreneurs you have to go hard and your epic failures are going to be even more epic, and maybe even on TV.<\/p>\n

“But be really confident and make a decision. If you’re going to do it, do it.<\/p>\n

“Not making a decision is the worst thing you can do.”<\/p>\n

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

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