How I Planned Our Pitch for the Shark Tank Investors

Rogelio Valdés

Dec 1, 2021

Today we are a fully online elementary and middle school that is changing the way children learn, and you can learn more about our methodology at robinacademy.com. At the time the show was recorded, however, that school service did not exist yet. We only offered online extracurricular content. So let me explain how the pitch came together, and why it generated so much confusion and controversy.

When I was invited to participate in the show, I had to think carefully before accepting. I personally liked the show a lot, but Robin was not raising capital at the time. We had just received investment, and we were focused on building new services, including the school we eventually launched in August 2021.

Knowing how the show works, I was sure they were not going to accept the valuation at which our most recent investors had come in. It did not seem very useful to step into the usual conversation of “how did you arrive at that valuation?”, “are these U.S. investors?”, “that’s too expensive,” and so on, when we did not actually need capital.

Even so, we saw the possibility of exploring a different type of agreement than a standard investment deal.

What is the main concern for investors? They want to maximize return and minimize the risk of losing money. So we began to think about proposals where investor risk could be reduced as much as possible, even to zero, without eliminating the upside.

Then we asked ourselves: beyond money, what would really help Robin? We focus mainly on delivering educational services directly to families and schools. That is our core. But in the past, we had also sold to governments and corporations. We know those segments can become large business lines, but at the time we did not have the capacity to focus on so many fronts at once, especially given the barriers to entry and the difficulty of reaching decision-makers in those sectors.

It is important to clarify that these are different business units only because they target different markets. The product itself is the same: the educational methodology and content we have spent years building.

It is like selling bottled water in 500 ml format and already having a profitable business. Then you discover the opportunity to sell large water jugs, or distribute your brand in cinemas or restaurants. The product is the same, but the channel and the distribution strategy change. Those become different business units.

That is exactly where the sharks could help us. Many of them have relationships with corporations or with the public sector, both of which could be interested in our educational offering. Again, we already knew there was demand in those segments, but getting an initial introduction to the right decision-maker is difficult. Even just receiving an introduction or contact inside one of those sectors is extremely valuable because it can unlock a whole new business line using a product we already have.

That is why we designed the proposal around the idea of opening new channels. We were willing to give up a percentage of those new business units in exchange for that key introduction, the contact, and the sharks’ mentorship. We could have asked for a symbolic amount of money; we have all seen deals where founders ask for $50,000, $100, or even $1. But I did not think that was necessary.

In that structure, the financial risk is zero because they do not have to invest capital, but the return is still there. And normally when a capital partner joins a company, their role is not highly operational. They open doors and advise the operating founders. That was the dynamic we were looking for.

And then came the million-dollar question, which I think is what confused the sharks the most: why split it into business units instead of offering a percentage of the whole company?

First, out of respect for the investors who had already joined earlier by contributing capital. But beyond that, entering into a partnership is starting a long-term relationship that will affect both sides. It is something you should think about carefully and only after truly getting to know the other person. In a way, it is like getting married. Imagine meeting someone and, fifteen minutes later, they propose. Your answer would be: “at least invite me for coffee first.”

A business partnership is very similar. Maybe we got along well in those ten minutes, and maybe I had read their biographies. But did we really know each other? What if we had completely different work styles? What if we had different visions? It is not a decision you make in ten minutes.

That is why creating a new business unit using the products we already had, together with their guidance, felt like a strong proposal. There was no financial risk, but there was still return. We were not getting married, but we could start getting to know each other. More like dating.

How far were we willing to negotiate? I am convinced that any partnership deal should leave both sides feeling like they are winning. If the deal is one-sided, that tension will hurt the relationship later. Why would you want to generate tension from day one in a relationship that depends on trust? That is why we were prepared to give up a larger percentage within that proposal. I even told the sharks that we could sign a discount that would allow them to enter as shareholders in the full company in the next funding round.

Unfortunately, we never got the chance to explain the full proposal clearly from the beginning, and that led to a series of misunderstandings. The biggest one was that these new business units would be built on services we had already created. The only thing we were seeking was access to the right decision-maker so we could open a new channel. If you still have not seen the pitch video, you can go to the Shark Tank México channel to see how the first part of the proposal was presented, but the conversation quickly became distorted.

Later on I will try to record a reaction video so we can talk more about what really happened moment by moment. But in the meantime, I want to ask you: what would you have done? What do you think of the proposal?

Let’s have an interesting and respectful conversation. I have seen comments saying, “Rogelio just wanted to hire them.” But did I actually say that, or was that something someone else said on set? Let me know in the comments what kind of deal you would have proposed.

Think again about the bottled water example. Imagine you already have a profitable business selling 500 ml bottles. You have also sold some water jugs to office buildings and some bottles to local cinemas, but you know that with the help of a shark you could build a much bigger business line in those channels. I will be reading the comments.