Start-ups

Why A-Rod invested $300,000 in this 'keto' cookie company on 'Shark Tank' 

Source: ABC 

Ketogenic dieting has taken 2018 by storm — the hashtag #keto yields nearly 10 million posts on Instagram alone. The so-called "keto" diet, is low-carb and higher in protein and good fats. That means eating less sweets, which can be hard to stick to.

Enter Nui cookies, a super low-sugar, high-fat cookie created to fulfill all keto dieters' dessert dreams. The company landed a $300,000 investment from guest judge Alex Rodriguez on ABC's "Shark Tank" on Sunday. After all, his girlfriend is a cookie junkie.

"I happen to know a woman who loves cookies. And I mean loves," Rodriguez said. "Jennifer [Lopez] eats a cookie every night before she goes to bed."

Nui co-founders Kristoffer Quiaoit and Victor Macias first went on the keto diet in 2016. They said they both noticed health benefits from needing fewer naps to Macias losing 40 pounds — but they just couldn't kick their sugar cravings. So the friends who had zero baking experience, used Quiaoit's mom's oven and got to work concocting their own, sugar-free cookie recipe. After nearly two dozen tries, they had a cookie they could enjoy while living the keto lifestyle.

Quiaoit and Macias turned that recipe into a business with Nui. The cookies, which now come in multiple flavors, contain only one gram of sugar each and fats like coconut oil and grass-fed butter, making them ketogenic-friendly, the co-founders told the Sharks. And Nui cookies are made using a proprietary blend of natural sweeteners, contains no GMOS and is gluten free.

"You can eat this whole box of [16] Nui Cookies, and still consume less sugar than one traditional cookie," Quiaoit said on "Shark Tank."

After trying samples of the cookie, the investors were impressed with the taste, as well as Nui's sales: over 12 months, the company sold $1.1 million worth of cookies.

Priced at $29.95 for a box of 20 cookies, it costs the entrepreneurs between $11 and $13 to make each box, depending on the flavor. O'Leary pointed out the entrepreneurs, who were selling only online, need to get that number down to $6 if they want to get into retail.

Quiaoit and Macias, who walked in the Tank seeking $300,000 in exchange for 10 percent of the company, said they needed the cash to buy the higher volume of inventory necessary to reduce cost.

Mark Cuban opted out due to his investment in low-cal cookie company Alyssa's Cookies. Lori Greiner was out too, citing a too-high valuation.

O'Leary jumped in with an offer similar to one he did with cupcake company Wicked Good Cupcakes — that season 6 deal turned out to be one of his most lucrative. O'Leary offered the Nui founders $300,000 for a 2.5 percent stake plus royalty of $1 per unit, which drops to 45 cents once the $300,000 is recouped.

Barbara Corcoran then offered $150,000 plus $150,000 line of credit for a 15 percent stake, plus a 50 cent per unit royalty in perpetuity.

Rodriguez also found the $3 million valuation hard to grasp, but the founders' personal stories resonated; both were from immigrant families (Macias' parents immigrated from Mexico, while Quiaoit's came from the Philippines) who worked hard to succeed in America.

"I connect with both your stories," Rodriguez said. "Coming from immigrant parent as well, I can really appreciate what really having a PHD is all about: the poor, hungry and driven. And I really feel that both of you have that."

With that, Rodriguez offered $300,000 for a 25 percent stake in Nui. He told them he would help them grow the business into something they will be proud of.

Corcoran and O'Leary balked and the co-founders tried to counter both Rodriguez's and Corcoran's offers. The two Sharks stood firm.

"Sometimes you have to understand when the opportunity of a lifetime is hitting you," Rodriguez told the co-founders. "And when you're cashing your check of several hundred million dollars, you're not going to worry about the 5 percent or 10 percent [equity]."

Indeed, because after a little more back and forth, Quiaoit and Macias accepted Rodriguez's offer.

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