There’s never an easy time to leave a comfortable job to start a business, but it’s especially risky when your daughter is six months old and your wife is on unpaid maternity leave.
That’s the gamble San Francisco-based entrepreneur Dave Vasen took in June 2014 when he left an executive position at AltSchool to found KidCasa, a preschool management service that later became Brightwheel. It’s paid off.
After a year of development and the branding relaunch, Vasen raised a $2.2 million seed round led by Eniac Ventures and RRE Ventures in June 2015. Just a few weeks later, Vasen saw “Shark Tank” was having tryouts down the street from his office and, because he had the idea of applying in the back of his head for some time, decided to improvise an audition.
He was called back for filming in September, and his appearance was finally broadcast Friday in the latest episode of the show’s seventh season. It revealed that he raised another $600,000 from investors Mark Cuban and guest Shark Chris Sacca, the billionaire investor best known for his lucrative early deals with Twitter, Uber, and Instagram.
“I’ll never forget hugging them after the deal,” Vasen told Business Insider. “I have such admiration for them.”
Vasen entered the Tank seeking $400,000 for a 4% stake in Brightwheel, giving his company a $10 million valuation. He was hopped up on two Red Bulls he chugged while waiting in the trailer the producers gave him.
Vasen explained to the Sharks that as the father of a toddler and as someone who’s spent the majority of his career in the education space, he’s seen firsthand that the operators of a preschool are placed in a uniquely challenging situation. “They’re not just managing a classroom, but managing a business, too,” he said.
Brightwheel is a service that allows preschool owners and employees to monitor both their paperwork and their students, with updates linked to a smartphone app for parents.
Here’s the app in action:
Vasen launched the pilot program in the fall of 2014 with 10 preschools, and as he stood in the Tank he had recruited 2,500 schools across all 50 states.
Brightwheel is free to download, but a premium account is available in packages ranging from $40 to $200 per month, depending on how many accounts will be linked together for a school. Vasen told the investors his projected revenue was $1 million for 2015, $6 million for 2016, and $20 million for 2017.
In the edited version of the pitch that aired, it appears that Vasen captured the attention of a few of the Sharks immediately, but he told Business Insider that the full experience — which lasted over an hour — was much more stressful.
“It got pretty negative pretty quickly,” he said. Daymond John and Mark Cuban have explained repeatedly that they’re always on the lookout for “gold diggers” — entrepreneurs with no intention of making a deal who use their “Shark Tank” appearance as a free commercial.
Vasen realised that he was putting the entire reputation of his company on the line, and that if he bungled his pitch, he would be embarrassing himself, his family, and his other investors. He explained to the Sharks that he was turning to them to get an adviser on his side who would put in much more work than the typical investor, and that even though he had accomplished a level of success with a small team, he needed the help to scale.
That was satisfactory for Kevin O’Leary, who opened up negotiations by offering $400,000 for 10% equity, cutting the company’s valuation down from $10 million to $4 million.
By this point, Cuban was sufficiently convinced Vasen was the real deal and began considering an offer because he realised “my kid’s preschool desperately needed this exact type of software,” he told us.
Sacca jumped in, dismissing O’Leary’s sharp devaluation, but saying he needed to invest on the same terms as the seed round, where the company was valued at $8.2 million. That meant his $400,00 would get him 4.85% equity.
Vasen quickly told Sacca the deal sounded good to him, but that he wanted to see if anyone else wanted to split it.
Sacca mocked the other Sharks, saying that they would be helpful to Brightwheel if Vasen was looking to make some T-shirts or get something into Bed Bath & Beyond. “What do you think you need from the rest of the line here?” he asked.
Cuban was offended. “Are you serious? Are you really that clueless?”
He jabbed back, saying that when Sacca affiliated himself with a company, “it adds a lot of street cred to his little part of the world. Once you get outside of that little bubble called Silicon Valley, it doesn’t mean sh–.”
“Uber, Twitter, Instagram operate in their own little world,” Sacca said sarcastically. “I’ve never been outside of San Francisco. Sorry.”
Vasen said he was thinking “this is surreal” as the two investors he had set his eyes on, Cuban and Sacca, spent minutes yelling at each other from opposite ends of the panel.
Vasen kept his focus and after some more back-and-forth, offered Sacca and Cuban a joint deal: $600,000 for 6%, split evenly, at the originally proposed $10 million valuation. Sacca said he’d compromise by doing that at a $9 million valuation, meaning he and Cuban would each get a 3.34% stake for $300,000.
Cuban said that worked for him, and Vasen took the deal.
And though Sacca kicked off a spat with Cuban that genuinely got both riled up, he told Business Insider that he and Cuban are old friends and that when Sacca took Cuban’s offer last year to appear on a few episodes of “Shark Tank,” “I agreed to go on the show so I wouldn’t miss the opportunity to bust his balls in front of millions of Americans. There is no doubt he adds an incredible amount of value to his companies. But I’m there to make sure he doesn’t get a free ride anymore.”
As for why he invested in Brightwheel, Sacca said, “My best entrepreneurs always have one thing in common: They radiate a sense of the inevitability of their success. Dave didn’t need to sell us. Instead you can tell he just knows that Brightwheel is going to win the space. That’s simply irresistible.
“Plus, in the same way that Uber solves a problem for both drivers and riders, I love how Brightwheel dramatically improves the lives of hardworking teachers, thrills parents, and empowers school administrators,” he added. “You nail a solution for those three groups and you’ve got a huge business on your hands.”
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