How a founder selling vegan jerky went from a negative bank account balance to getting a 6-figure investment from Mark Cuban
Michael Pan, founder of vegan mushroom jerky company Pan's, is one of the 5.2 million business owners to receive a Paycheck Protection Program (PPP) loan from the government amid the coronavirus pandemic, he said on Friday's episode of ABC's "Shark Tank."
"It's been a really crazy year," Pan said during the episode. "Being [an] entrepreneur for so long, you go through so many peaks and valleys, this year especially. Seeing your bank account go negative, seeing people's lives at risk."
Pan was inspired to create his shiitake mushroom jerky company in 2018 after visiting family in Borneo, Malaysia. During his trip, Pan's cousin, who is a vegetarian Buddhist, made a mushroom snack that Pan initially thought was pork. He was impressed with both the taste and texture and knew he wanted to bring the snack back to the U.S.
To get the business off the ground, Pan put in $100,000, which he borrowed through a few loans, he said during the show. His funds were "all bootstrapped," he said, meaning he didn't raise any money from outside investors.
He sells the plant-based jerky for between $7.99 and $8.99 retail, but it only costs him $1.67 to make, he said. The snack is also vegan, paleo-friendly, Kosher, soy-free and gluten-free, according to the company's website.
In 2018, the year Pan's launched, the company made $300,000 in sales, he said. In 2019, the company made $755,000 in sales, and Pan projects his company will make $1.5 million in sales by the end of 2020.
"We're about $95,000 to $100,000 a month in sales right now," Pan said at the time of filming. His mushroom jerky is sold in over 700 stores total, including Whole Foods.
However, the business has still faced hurdles. Pan got emotional reflecting on this year and the pandemic, as it has impacted him and his company's growth.
From the Sharks, Pan sought a $300,000 investment in exchange for 10% equity in his business and hoped for a Shark to help him keep it growing.
After trying his product, the Sharks were impressed.
"This is great," Shark Daymond John said.
"Incredible, I have none left," Blake Mycoskie, guest Shark and founder of Toms, said.
Investors Lori Greiner, Mark Cuban and Mycoskie were all interested in Pan's and made offers. Cuban offered $300,000 for 20% equity, while Greiner and Mycoskie teamed up to offer $300,000 for 30% equity.
To sell his offer, Cuban pointed out that he already has a portfolio of plant-based companies and knows how to successfully market Pan's product. "I've done this before. We already have Alyssa's [vegan cookies], we have Snacklins, Unreal Deli. And I'm a vegetarian. So, I live this," Cuban said.
Pan negotiated with Cuban, and ultimately, Cuban agreed to a $300,000 investment for 18% equity.
"I've been on this path for a while, and to have this happen is extremely emotionally satisfying," Pan said.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
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