In July 2017, Sleeping Duck founders Selvam Sinnappan and Winston Wijeyeratne entered the feeding frenzy that is Channel Ten's Shark Tank Australia. After some intense grilling and negotiations, we were offered a $500,000 deal from Steve Baxter. Which we then turned down.
We know plenty of viewers will think we're crazy for walking away from a half-million dollar investment. But the reality is when you're giving away a stake in your business, it needs to be right, and that night it wasn't.
Didn't catch it live? Watch it at tenplay.com.au/SharkTank
Before we get into the details, we thought we should share why we decided to go on Shark Tank in the first place.
Since we hatched Sleeping Duck in 2014, we've been actively trying to change the way the mattress industry works. Sleeping Duck came about because of our own frustrations with the process of buying a mattress. Over the years we've worked hard to make our buying experience as smooth and risk-free as possible, nurturing every single person who's come into our (virtual) store. We even pioneered the 100-night trial.
Our mattress is developed from hundreds of hours of research and development. We looked at the existing technology and materials, gathered feedback and then implemented only what worked. Our combination of pocket springs, gel-infused memory foam and natural latex sets us apart from just about every other brand out there. And our modular construction – allowing you to switch the firmness of your mattress with a simple pull of the zip – is unique to the market.
All that effort has definitely paid off. We've expanded into new countries and, more importantly, have had incredible feedback from our customers.
But with new brands entering the market all the time, along with the massive challenges that come with going up against the mattress industry heavyweights, we felt it was the right time to find experienced investors to help Sleeping Duck grow.
In the weeks leading up to the show we discussed whom of the Sharks we'd most like to make a deal with. Janine Allis and Steve Baxter were at the top of our list, based on their experience. But we thought any of the Sharks would be able to contribute valuable insight and connections to help us reach our goals.
We went on the show asking for $500,000 in return for a 5% stake in Sleeping Duck, with a valuation of $10 million.
We knew we were asking for a higher investment than what you normally see on the show. And we knew going in we'd have to be prepared to back up our valuation and show the Sharks why Sleeping Duck was a good investment.
We received two offers on the night. Andrew Banks was first off the bat, offering us a deal that included an ongoing royalty until the investment was paid off.
Then Steve Baxter came in and made us an offer of $500,000 for a 15% stake in the business. This effectively cut the valuation of Sleeping Duck by a third, from $10 million to $3.3 million.
While this was a lower valuation than we had wanted, we thought Steve probably knew the most about the online mattress business and would have valuable insights to help us grow.
We went back into the tunnel to discuss the deal. We decided to counter with a 10% stake for $500,000, at a valuation of $5 million.
But when we went back to face the Sharks, the feeding frenzy began.
Glenn Richards said we shouldn't take the deal because all Steve wanted was to take the brand and sell it to a competitor. Steve was pretty upfront about this, saying we were a prime target for takeover.
We reiterated the work that had gone into developing the mattress, our technological investments and our plans for Sleeping Duck: how we see it as more than just mattresses. We're actually in the business of delivering a great night's sleep and our goal is to develop products which achieve that.
In the end, we couldn't move forward with the deal because the future the Sharks saw for us didn't align with where we wanted to take Sleeping Duck.
For us now it's about continuing what has made us successful to date. And that is next-level customer service and continual improvement of the mattress. We believe our customisable product will revolutionise the way mattresses are bought and thought of. We have multiple improvements in the pipeline that we'll slowly release over the next year. And we will add to our range, with products we believe will truly improve the sleep experience.
We already sell in Australia, the UK, and multiple locations throughout Europe. We have recently expanded to New Zealand and Hong Kong. Throughout the year we will continue to push on with our planned expansion through Asia.
Just like we said on Shark Tank, we're still looking for the right partner to help get us out to the masses. If that's you, feel free to get in contact with us. In the meantime, we're going to push on and continue to redefine what sleep looks like.