Entrepreneurs

This reusable straw company raised $1.89 million on Kickstarter and didn't get a 'Shark Tank' deal

Share
FinalStraw founders Emma Rose Cohen and Miles Pepper pitch on ABC's "Shark Tank." 
Eric McCandless | Getty Images 

More than $1 million in pre-sales — and a mission to save marine life — wasn't enough to lure sharks on Sunday's "Shark Tank" season premiere.

Emma Rose Cohen and Miles Pepper pitched the sharks with their company FinalStraw, a $20 re-usable, collapsible straw that folds up and fits in a small key chain-sized case. FinalStraw aims to reduce plastic straw use by giving consumers an eco-friendly alternative. Plastic straws, FinalStraw says, are non-recyclable and don't decompose, polluting oceans.

To illustrate their point, the founders had 5,700 plastic straws rain down from the "Shark Tank" ceiling to represent the number of straws used every second in the United States.

FinalStraw launched in April on Kickstarter. The company made headlines this spring when it smashed its Kickstarter goal of $12,500, reaching $550,000 in seven days. At times during the campaign, the company has drawn $15,000 a day in pre-sales on its website, according to Cohen. As of this writing, FinalStraw's Kickstarter campaign page touts 38,443 backers and pledges of $1,894,878.

These numbers, while impressive, did not persuade the sharks to give the founders what they came for: a $625,000 investment in exchange for a five percent company stake.

Several sharks weren't sure the founders truly had a market yet. The Kickstarter campaign will not fulfill until November and Daymond John, for instance, struggled to believe people would pay $20 for a straw.

Lori Greiner agrees. "There's really dozens and dozens of straws out there to do what yours is doing," she says. "You haven't sold them and gotten them into people's hands yet. I like a product to be in-hand and know that it's really working."

Eric McCandless | Getty Images

Kevin O'Leary and Mark Cuban see opportunity but the founders' flubbed negotiations tank those deals, leading to some of the episode's most tense moments.

The first offer, from Kevin O'Leary, is an investment of $625,000 for a 10 percent stake. This deal required a royalty of $2 per straw until he recoups $1.8 million. "The only way this works for investors is to structure a deal where they get their capital back on a scheduled way," O'Leary says, explaining his strategy. "You're not really a company yet. You're a mission with a product."

The founders let O'Leary wait for a response as the other sharks back out, allowing tensions to escalate. "We want a partner," Cohen finally responds when O'Leary presses for an answer. "We want someone who is going to be in there with us. We can't be bleeding the company out of money right at the beginning."

Later, Cohen adds she's open to entertaining offers at higher percentages. This prompts O'Leary to leave the negotiation. "When I invest in a company, do you think I go against them?" O'Leary asks the founders.

Talks are equally rocky with shark Mark Cuban. He offers $625,000 for a 25 percent stake. Cohen pushes back on Cuban's offer, explaining: "The valuation you gave us is $2 million, and we've already done more than that in sales in two months."

While FinalStraw did not get funding, the company could still go on to achieve great success. Such was the case for the episode's guest judge Jamie Siminoff whose 2013 "Shark Tank" appearance didn't end in a deal.

In February, Amazon bought his company Ring for a whopping $1 billion.

Correction: This story has been updated to reflect the fact that Ring sold to Amazon for $1 billion.

Don't miss: Behind-the-scenes 'Shark Tank' secrets from founder of 'Tank' reject Ring, which Amazon bought for $1 billion

Like this story? Subscribe to CNBC Make It on YouTube!

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."