Start-ups

'Shark Tank': Why these toothpaste company founders turned down a 6-figure deal with Mark Cuban

ABC/Eric McCandless

It's not every day someone turns down a six-figure investment from Mark Cuban on ABC's "Shark Tank." But two entrepreneurs did just that on Friday's episode. 

Asher Hunt and Lindsay McCormick, founders of Bite Toothpaste Bits, asked the Sharks for a $325,000 investment in return for a 5% stake in their company – but Cuban wanted a larger piece of their business, and the co-founders were not prepared to give more than what they offered. 

McCormick was inspired to create their small toothpaste tablets while traveling for work. 

"I went through those little toothpaste tubes, and I was like, 'This is so wasteful.' So, I started looking into alternatives, and that's when I learned about all the nasty chemicals that are in most toothpaste," she told the Sharks during the episode.

"And I don't want those in my body. I started looking into how I could make my own."

Bite Toothpaste Bits are sold in glass bottles, and each are made with gluten-free and vegan ingredients, according to the company's site. 

Hunt and McCormick told the Sharks they had no outside funding or debt, which Cuban was happy to hear. The co-founders also said they sell the product for $12 to $30, but it only costs them $3.15 to make, which impressed the Sharks.

But the amount of competition in the toothpaste market worried the investors.

"I can't think of a more competitive shelf," Shark Kevin O'Leary said during the episode.

Guest Shark Katrina Lake, founder and CEO of Stitch Fix, agreed with O'Leary.

"What you guys have done is amazing, and doing this all bootstrapped, in a short period of time," Lake said. "The product is awesome and the packaging is great. But I think this is a really crowded space and potentially getting more crowded."

Despite this, Cuban still made the co-founders an offer.

"I love it when there's a stodgy old industry and somebody walks in and says, 'Let's just turn this upside down,'" Cuban said. "I'll make you an offer. I'll give you the $325,000, but I need 15%."

The co-founders refused to give Cuban more than 7% of their company, and ultimately decided to walk away from his offer.

"Mark, I want to work with you, but this is a lot," McCormick said. "We really appreciate the offer, but we can't."

And while Cuban respected their decision, he was surprised by it. 

"It is shocking when someone says 'no' to me. When was the last time that even happened?" Cuban said after the entrepreneurs had left. "They are rolling right now. When your business hasn't hit real adversity yet – everyone is a genius in a bull market."

"When things are good, you think they're gonna be good forever," Robert Herjavec agreed.

But McCormick tells CNBC Make It that she and Hunt "know we did the right thing."

According to McCormick, Bite has 50,000 subscribers and is profitable. And that's because of their "dedication to customers and the planet," she says.

"Hey, maybe one day he'll look back and think we were the one that got away," says McCormick. 

Check out: The best credit cards of 2020 could earn you over $1,000 in 5 years

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

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