It’s a cut-throat few minutes of TV, where failing to know your numbers – or just fluffing your pitch – can get potential investors’ eyes rolling.
Will Davies says he and co-founder Dave Trumbull decided to go on the show because they were in the midst of a funding round - part of an aggressive national growth plan.
“We already had $1.3 million so we were feeling pretty confident with that, and we were in conversation with Caltex (who later invested $2.5 million),” says Davies.
"It wasn’t the fifteen investors already on board and the $7.6 million valuation that captured the interest of Baxter."
They felt the PR would be handy, but also wanted to make a genuine attempt to win over the judges.
But it wasn’t the fifteen investors already on board and the $7.6 million valuation that captured the interest of Baxter. He says it was the “exceptional” nature of the founders that convinced him to invest – along with the traction they’d already gained.
Car Next Door, founded in late 2012, allows people to list their cars for rent when they’re not in use.
To date, about 460 owners and 17,000 borrowers have signed up across Sydney and Melbourne. The plan is to reach 10,000 vehicles by 2020.
“The business is about using otherwise under-utilised assets and as such there is a terrific amount of scope given their current limited geographic scope,” says Baxter.
“I liked this business for numerous reasons but the fact it uses technology to provide the outcome and therefore has a great potential for scalability was quite important.”
"The most common mistakes contestants make are around valuation and proof of traction."
As well as providing capital, Baxter says he believed his experience as a first round investor in taxi and rideshare booking app goCatch, along with other app and web-based businesses, would be an asset.
“Steve’s been really, really generous with his time, and giving advice,” says Davies. “He’ll sometimes just call up and ask a few questions. He’s quickly become one of the most proactive investors.”
Davies advises other businesses thinking of appearing on Shark Tank to “know your numbers back to front”, along with your unit economics. That’s how much it costs you to acquire a customer and how much gross profit you make per customer.
As for Baxter, he says the most common mistakes contestants make are around valuation and proof of traction.
“If I do not like the idea or thing but you have lots of people buying or using it then I am obviously wrong,” he says. “Prove traction and valuation will look after itself.”
Larissa Ham is a Melbourne-based freelancer. She write for publications including The Age, The Sydney Morning Herald, The New Daily and Forge magazine, and also shares money saving tips at Hey, Little Spender!