Hollywood Startup Enters 'Shark Tank'Tuesday, September 24, 2013
Entrepreneur Josh Brooks is accustomed to pitching investors on his postcard-sending app. But that doesn't mean he was ready for the hot seat when he appeared on last week's season premiere of ABC's "Shark Tank."
Brooks walked away with a $300,000 investment but had to lower the valuation of his Hollywood startup, Postcard on the Run, in the process.
"It was pretty wild, to say the least," Brooks said. "You have to really be on your game and know your product inside and out."
Postcard on the Run is an app that lets people take a digital vacation photo, affix a note and signature and then mail it as a postcard to friends and family for less than $3.
The company, founded in 2011, has raised north of $1.5 million from investors that include Santa Monica’s Siemer Ventures and actress Selena Gomez.
But Brooks said he was looking for a way to raise additional capital and start spreading the word about his app and settled on "Shark Tank" as the solution.
"As a startup, you are always thinking about capital and adding more gasoline to the fire," he said. "When given the opportunity to raise a little more money and get some significant marketing, it's an amazing thing to do as a startup."
Brooks entered "Shark Tank" asking for $300,000 at a $6 million valuation, which equals a 5 percent stake in the company. During the negotiations, he revealed that the company had made $450,000 in revenue in just less than two years and had about $185,000 in the bank.
Several of the investors, including Mark Cuban, criticized the valuation as being too high and quickly ruled themselves out of the deal.
That left Brooks to haggle with Canadian tech entrepreneur Robert Herjavec. They eventually settled on a $300,000 investment at a $4 million valuation, giving Herjavec a 7.5 percent stake in the company.
Brooks said Postcard on the Run is looking to increase its marketing budget to get the word out about the app. On Monday the company announced a promotion with Sony Pictures around upcoming children's film "Cloudy with a Chance of Meatballs 2." Using a special promo code, customers can send a free postcard through the app.
The company has also expanded into other products, including customizable cell phone cases.