Start-ups

Kevin O’Leary made a ‘Shark Tank’ founder cry — and then invested $100,000 in her start-up

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Kevin O'Leary is known for his business acumen and blunt honesty. Too blunt, sometimes, as it turns out.

On Friday's episode of ABC's "Shark Tank," the longtime investor brought Raquel Graham, founder of Chicago-based apparel start-up Roq Innovation, to tears. "You're a crazy chicken," O'Leary told Graham, referring to her energetic personality. "I like crazy chickens."

The comment was apparently intended as a compliment: O'Leary seemed impressed by Graham's sheer perseverance. Initially after launching in 2014, Roq Innovation struggled as a seasonal business: At the time of filming, Graham said her company had earned $2.4 million in lifetime sales.

But Graham told the Sharks that despite a pandemic-induced factory closure in early 2020, her flagship product line — Headlightz, a set of hats and headbands with removable and rechargeable LED lights — marked a potential turning point.

Headlightz was projected to make $1.7 million in revenue by the end of that year, Graham said. In November, the product line made Oprah Winfrey's "Favorite Things 2021 List."

Graham's story involved more than just a business turnaround, too — which is why she didn't take O'Leary's comment lightly. "I'm not a crazy chicken, I'm really driven," Graham said tearfully during the episode. "I do a lot by myself, but I know I can improve on some things."

In 2016, Graham said, a misdiagnosed case of fungal pneumonia spread to her leg, and she became unable to walk. Soon after, she continued, she suffered a stroke and her lungs failed twice in the span of two days. According to Graham, she was on a ventilator from late August to late September that year.

"You championed over adversity, that's good," O'Leary said, reassuring a shaken Graham.

"Good for you," investor Lori Greiner told Graham. "And frankly, I understand why [O'Leary's comment] bothered you. It would have bothered me, too."

O'Leary never apologized during the episode, but he did offer Graham $200,000 for a royalty agreement: $2 for each hat sold. Once he made his investment back, the royalty would drop to $1 per hat.

Peter Jones, a guest Shark on the episode, tossed in a competing offer: $200,000 for 25% of Roq Innovation. Jones added some additional incentive, saying he could also help the company sell products internationally.

After some deliberation, O'Leary and Jones agreed to make a joint offer, split evenly: $200,000 for 20% of the company, with a $1 royalty on every hat, which would last until the two investors earned back a total of $600,000.

Graham accepted. "It's been an incredibly difficult journey getting here," she said during the episode. "All this hard work has paid off. Having two Sharks — Mr. Wonderful and Peter — it makes it all worthwhile, and I cannot wait to get started."

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

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