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ABC's Shark Tank has continued to showcase American entrepreneurship since 2009. In a May 2024 discussion on The Iced Coffee Hour, Kevin O'Leary revealed how a season 10 investment in Basepaw yielded his highest percentage return in the show's history.
O'Leary initially dismissed the concept when presented with the $29 testing kit. However, as he described, he liked the focus of founder Anna Skaya which made him take the bet. His exact words were,
“No one gave her a dime except at the end of her pitch I just thought wow this woman just does not stop. She is vicious. She is so focused on this idea that she can help cats live longer, and if people care enough about their cats they’ll give $29. I said okay ‘I can’t take it anymore’, I’ll give you the $250,000”
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The deal structure involved both Sharks splitting the investment equally at $125,000 each. The acquisition by Zoetis, an $80 billion animal health company, in 2022 centered on accessing Basepaws' extensive cat DNA database rather than just the testing kits.
O'Leary reveals how Basepaws became his most profitable Shark Tank deal
Pitch recap
Basepaws entered Shark Tank during season 10 episode 21, with founder Anna Skaya requesting $250,000 for 5% equity. The numbers showed 2,500 kits sold within ten months, bringing in $200,000 in revenue. Skaya's financial data revealed a $25 manufacturing cost per kit with a retail price of $95, creating strong profit margins.
The Shark Tank pitch faced early resistance from multiple Sharks. Lori Greiner declined involvement, stating insufficient sales figures as her main concern. Mark Cuban and Daymond John stepped back from the opportunity, sharing similar views about early-stage revenue numbers.
Kevin O'Leary, despite his initial skepticism, made the first move with an offer of $250,000 for 8.3% equity and an additional 1.7% in advisory shares. Robert Herjavec matched O'Leary's exact terms.
Skaya, aiming to maintain consistent investment terms with her other financial backers, worked to bring both Sharks together. The negotiation concluded with O'Leary and Herjavec each investing $125,000 for 5% equity, creating a combined 10% stake in the company.
Kevin's reflections
During his May 2024 interview, O'Leary detailed the decision-making behind the Basepaws deal. The founder's determination made a lasting impression on Shark Tank investors, leading him to reconsider his initial stance on the business concept. "She was so compelling," O'Leary praised.
O'Leary highlighted how the company's true value emerged through its data collection. The DNA database grew to include hundreds of thousands of cat genetic profiles, making it a valuable asset for research and development in animal health.
"Months later, she sold it to a giant pharmaceutical, not because of kits because of the data," O'Leary shared in the interview.
The success rate of female entrepreneurs caught O'Leary's attention, with 75% of his profitable deals led by women entrepreneurs like Skaya, as he revealed on his podcast. He described her as "ferocious" in her pursuit of success, noting her focus on improving cats' lives through genetic information.
Product background
Shark Tank’s Basepaws testing kit offered comprehensive genetic analysis for cats through a mail-in service. Each kit provided breed identification details and health risk assessments based on genetic markers. The company built its service around an expanding database, offering customers continuous updates about their pets' genetic makeup and potential health concerns.
Skaya's business model included plans for market expansion beyond cats. The initial funding would support research into DNA testing for dogs, horses, and other household pets. The company maintained its testing operations in a Los Angeles laboratory facility, handling all genetic analysis in-house.
Post Shark Tank
Following the Shark Tank appearance, Basepaws experienced significant growth. The company expanded its product line in 2020, introducing cat dental health tests. During the same year, they developed Covid-19 testing capabilities for cats, showing adaptability to market needs.
As documented on Basepaw’s official YouTube channel, the acquisition by Zoetis took place in June 2022. The deal, valued at over $50 million, included keeping Skaya in her leadership role to maintain business continuity.
Fans can catch new episodes of Shark Tank on the ABC network.
