'Yep, that was us' -- What Australian startup Nexus Notes learned after being eaten alive on Shark Tank this week

Nexus Notes founders pitched to the Sharks on Sunday.

After copping a grilling on Shark Tank last night, if you headed to the website of Australian startup Nexus Notes this morning you would’ve been greeted by this pop-up:

It’s a way for Nexus to own up to how they were perceived on the Channel Ten show on Sunday after Shark Tank judges drilled them on why their valuation had suddenly jumped from $660,000 to about $4 million.

After pitching the company, which sells university notes compiled by students, founders Richard Hordern-Gibbings and Hugh Minson asked the sharks for $300,000 for 7.5% of the company.

The Boost Juice founder and Shark Tank judge Janine Allis said the founders started off really strongly with their pitch. Have a look:

But the sharks didn’t bite. The judges wanted to know how the company had decided its valuation was now $4 million — a big jump from a Startmate investment of $50,000 for 7.5% equity which valued the company at about $670,000.

Minson told Business Insider the founders came up with the valuation after they “looked at what we are trying to achieve as a business as a whole, disrupting the education sector globally by giving the best students the tools to teach their peers. Our early traction and high scalability warrant the valuation.”

But that didn’t fly with the Sharks. Judge Steve Baxter made an offer which the peer-to-peer uni notes startup turned down and Allis wrote on her blog: “Everything was going really well; the interest was high and we could all see the benefit of investing in the business. And then… Steve asked the question on shareholders and we discovered that they were offering the same percentage of 7.5% for only $50,000 to another business.”

“So how this would work is that if we invested the $300,000 for 7.5% not only is our contribution 6 x that of the kick start business but due to the other deal, our value would be immediately reduced by 6 x – which is basically ripping off your investors. As you can tell Steve was not happy and his annoyance was reasonable.”

The remaining three sharks chose not to chip in as they decided the valuation was too high.

Allis said the only way a deal would’ve been done was if Baxter was made the major shareholder with a 45% stake or (7.5% x 6). But Allis said she didn’t think the co-founders were out to catch the sharks with a raw deal.

“I don’t think what Hugh and Richard did was a deliberate act to rip anyone off, I just don’t think they thought through the consequences of the offer. With any deal you do, make sure you always put yourself in the other person’s chair and see if it is a win-win,” she said.

The one thing last night’s appearance has done is secure a bunch of media attention for the startup. Hopping on a plane to San Francisco today, Minson told Business Insider he’d do it all again.

He said the company’s seed round is still open and given the Shark Tank opportunity again, he’d take it because founders need to “do everything you can to further your business in its early stages.”

“I would recommend every entrepreneur does everything they can to grow their companies. Often, tech companies need cash to scale quickly, so speak to as many potential investors as possible in the aim that they share your vision and help you on your way. Whether those investors are on a TV show is irrelevant. Go pitch them!”

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