The Lion’s Den Entertains, But Will It Engage New Investors?
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$100,000. Johnson was ready to give up 30 percent equity in Grass & Root for $48,000. (Yes, there was specific talk of company funding—including open financing rounds—something that has been absent from other recent startup pitch events in deference to JOBS Act rules on soliciting investors. Organizer Jeri Andrews clarified to the crowd that the entrepreneurs cannot directly solicit investment from the audience. “The audience or the lions must start that part of the conversation,” she says.)
“I can tell you for sure that Josh Henderson is not going to sell 30 percent of his business for 48 grand,” DeVore said. “I think you should be asking for more from this crowd. You’re charming. Your idea is good. I want you to believe in yourself more, ask for more from your investors, and expect more from yourself. Build a bigger business and sell less of it.”
DeVore and other lions repeated this advice—amounting to go big or go home—to several of the entrepreneurs.
It suddenly seemed like Johnson was willing to part with too much equity in this nascent business at too low a valuation. Yet here was Team Schafer offering exactly what she had asked for.
“It’s about getting you to where you want to be,” Schafer said. “But if you want to be with the guys who have the money and say they can do it and do it now, that’s fine. If you want to go with Luni, then you can go.”
Libes is an experienced adviser to smaller companies that can be funded in their initial stages through bootstrapping or crowdfunding. He also takes an equity stake from companies that participate in Fledge, in exchange for 10 weeks of help and a $20,000 stipend. It’s much less than 30 percent, he said, though he wouldn’t “negotiate it here in front of the crowd.” The crowd, very engaged in this live bit of deal making, hissed.
All eyes on Johnson. Palpable tension in the room. Douglas to the rescue, calling for intermission to give Johnson—pictured at top—a moment to consider her choices. She’s mobbed at the break by people wanting to give her advice.
“I have so many questions,” she said when the show resumed. “And I’d like to take 48 hours and find out more about these things.”
A wise decision. As of Friday afternoon, she hadn’t inked a deal.
Johnson delivered one line that summed up the spirit of the event and the feeling in the Palace Ballroom on Thursday night. She was talking about the city’s reasons for approving food trucks a few years back, one of which is to provide low-cost business opportunities for aspiring entrepreneurs.
“You know how that makes me feel when I read that?” Johnson said. “I get inspired. I feel like the greatest city in the world—our city—wants me to start a juice truck.”