Vengo Labs cofounders Brian Shimmerlik and Steven Bofill secured a $2 million deal with “Shark Tank” investors Kevin O’Leary and Lori Greiner, paving the way, with celebrity fanfare, for a large-scale rollout of their company’s mini touchscreen vending machine.
Vengo showcased the machine at the recent Amusement Expo International in Las Vegas and will continue on the industry tradeshow circuit with an exhibit at the National Automatic Merchandising Association’s OneShow in Las Vegas in April.
On ABC’s Mar. 18 “Shark Tank “episode, Shimmerlik and Bofill made their initial pitch for $2 million in exchange for 12.5% equity. O’Leary initially offered $2 million in venture debt as a three-year loan at 7% interest, in exchange for 6% equity. Greiner said she liked the concept, but thought the design needed work to be more appealing and useful. Shimmerlik asked O’Leary and Greiner if they’d be interested in splitting a deal and they agreed.
Shimmerlik convinced O’Leary and Greiner to adjust their initial joint offer of 4% equity, and the entrepreneurs left the Tank with $2 million in venture debt, to be paid over three years at 7% interest, in return for just 3% equity of their company.
Shark Tank investors Mark Cuban, Daymond John and Robert Herjavec weren’t sold on investing in the concept.
The vending industry entrepreneurs told the Sharks that Vengo generated about $1 million in revenue in 2015 and it is expected to break even in 2016.
Vengo machines carry products ranging from candy and earbuds to over-the-counter medicine. Partner brands are advertised on the machine’s 21.5” touchscreen. For the past year, Hershey Co. reportedly has been selling Reese’s Peanut Butter Cups and Ice Breakers mints through Vengo machines in office accounts.
Vengo is working with consumer packaged goods companies to create point-of-purchase marketing campaigns. The company shares media revenue with its operators.
Vending operators purchase the machine and pay a $20 monthly fee for access to the to the company’s cloud-based software and technical support. Each brand pays a monthly fee of $200 per unique product per machine.
Vengo said its latest vending machine model will be produced by San Diego, CA-based D&K Engineering, an R&D and manufacturing specialist.
The company currently has 250 machines in the field and its goal is to have 1,000 venders up and running in 10 American cities by yearend. In February, Vengo announced that Canteen, the nation’s largest vending operation, had agreed to place its machines in college and university locations.
Vengo was founded in 2012 as Taxi Treats, which won the NYC Economic Development Corp.’s “Next Idea” contest that year. The original concept is intended for installation in taxicabs. Since its founding, and prior to its “Shark Tank” triumph, Vengo had raised $5 million in funding from various investors.