- Safety app firm Guard Llama strikes a deal with real estate mogul Barbara Corcoran in exchange for a big chunk of equity.
“Sharks, consider the guard llama. Docile, unassuming, non-threatening — at least at first glance,” Guard Llama co-founder Joe Parisi said before five of Shark Tank’s judges.
“But when a predator approaches, this all changes. Llamas are known for charging predators head-on with deadly force.”
Indeed, it’s not every day that real estate entrepreneurs walk onto a national TV stage with a real, live llama — and walk out with a $100,000 investment.
On Friday night’s episode of Shark Tank, Parisi and Nick Nevarez, who created and run the personal safety firm that peddles an emergency alert key fob and app, went on the show with a llama at the end of a lead rope.
Though it wasn’t an easy sell, their product won over real estate’s Barbara Corcoran and nabbed more cash, further filling up the money pot fueling real estate-related tech.
— Rob Merlino (@Hotdogman1964) April 11, 2017
What’s Guard Llama?
Users press Guard Llama’s key fob twice when they are in trouble. That action alerts Guard Llama’s Springfield, Illinois-based Emergency Dispatch Center through the Guard Llama app, so long as the user is within 150 feet of his or her phone.
The center sends police — and any other contacts whom the user has designated — the user’s GPS location, photo and medical information.
Because users don’t have to spend time talking to a dispatcher or fumbling with their phone and the GPS pinpoints where they are within nine feet, police can find users up to three times faster than if they had called 911, according to Guard Llama.
The company currently has 2,000 users; a premium subscription costs $9.95 per month or $99.50 per year.
Guard Llama was one of seven startups chosen for the National Association of Realtors’ REach tech accelerator in 2015. REach is aimed at helping startups grow revenue by tweaking their products to best fit the real estate industry, and by providing networking channels to get them face to face with decision-makers, according to NAR.
The trade group congratulated Guard Llama on its Shark Tank win, noting that while 95 percent of Realtors have never been the victim of crime, 39 percent have found themselves in situations where they have feared for their safety or the safety of their personal information, according to NAR’s 2016 Member Safety Report.
The llama sighting prompted surprised faces and some delighted smiles from the judges, including real estate mogul Barbara Corcoran who said, “I’ve never seen one. Wow!’
But things quickly turned to serious business. The Chicago-based company was seeking a $100,000 investment in exchange for 5 percent equity.
The Shark Tank judges appeared to be impressed with a feature that calls users when they’ve pressed the key fob twice and asks for a disarm pin, but — in case users are being held against their will — allows users to enter any pin other than the disarm pin to signal distress and have the police come anyway.
Still, some of the judges — who invest their own money into the products they choose on the show — couldn’t get past the liability issues posed by Guard Llama’s product.
“If it didn’t work in one instance and something happened, it could be a liability nightmare,” said multimillionaire Lori Greiner, who is known as “The Queen of QVC” and “The Warm-Blooded Shark.”
Billionaire Mark Cuban, owner of the Dallas Mavericks, said that when the company scales up to 200,000 or even 2 million users, “someone unfortunately is going to have serious consequences. Too many things can go wrong. So for those reasons I’m out.”
Venture capitalist Chris Sacca also passed, doubting the company’s direct-sales business model.
See that coming?
In the middle of negotiations, something happened that caused a bit of consternation: The llama decided to do its business, right then and there.
But a few moments later, Guard Llama’s fate on Shark Tank turned the corner. Entrepreneur and investor Kevin O’Leary, known as “Mr.Wonderful,” offered Parisi and Nevarez a royalty deal: He would give them $100,000 and in return get 5 percent equity as well as $5 on every future subscription until he’d made $120,000, at which point the royalty would go away.
Corcoran, founder of New York City brokerage The Corcoran Group, also made an offer, which was colored by personal experience.
“My younger brother was on a motorcycle a year and a half ago. A truck hit him and we couldn’t find him for two days. He was in a coma. Luckily, he survived, but I personally was shocked that we couldn’t have a local cop simply tap into his GPS” because of privacy laws, she said.
“So I think there’s a real need for your product.”
She offered Guard Llama a $100,000 no-interest loan in exchange for 20 percent equity in the company. Corcoran would get $2 per sale until she recouped her loan. But she would also use her real estate ties and notoriety to boost the company’s success.
“Your sweet spot on this is that it’s a panic button. If you approach the Realtors, I’m convinced that’s the easiest low-hanging fruit you can grab,” she said.
“And of course I know that space because I’m the sweetheart of all the Realtors and so if I was fronting for you, you would sell like crazy.”
Parisi countered with an offer of 15 percent equity and the two ultimately settled on 18 percent.
Corcoran had been the company’s “first pick” among the Shark Tank investors because of her iconic status in real estate, the company’s core market to date, Guard Llama said in a blog post.
“For us, the big opportunity isn’t about getting funded and hitting another dollar figure. It is really having someone [like Barbara] impressed enough with our idea enough to stand behind it like we do — and get it in front of a larger group of people who could benefit from the protection it provides. Huge, huge win,” the company wrote.
Check out the clip from the show featuring the Guard Llama founders: