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Margaret Nyamumbbo appeared on Shark Tank season 14, episode 14, which aired on February 17, 2023. She sought $350,000 in exchange for 5% of her Kenyan coffee brand, Kahawa 1893 Coffee. Kevin O'Leary was impressed by the product's quality and Margaret's story. However, he disagreed with the business' $7 million valuation. As a result, he refused to present Margaret with an offer.
"I'm just looking at it as an investor, okay? You've asked for too much money. That's the problem," he explained.
According to Kevin, popularly known as Mr. Wonderful, Margaret's business was worth $2 million at best. While the other Sharks disagreed, Kevin stated that Kahawa Coffee would expand only if a bigger brand with distribution bought it. Contrary to Kevin's belief, the other investors claimed Margaret needed a larger investment to grow her business.
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After a bidding war ensued among the remaining Sharks, Margaret shook hands with guest investor, Emma Grede, giving away 8% of her company in exchange for $350,000.
The deal with Emma was successfully finalized, providing the company with valuable funding and expertise. Since its appearance on Shark Tank, Kahawa Coffee has grown and made its way into major retailers like Trader Joe's, Target, and Costco. As of December 2024, the company has a reported net worth of $8.75 million, with an annual revenue crossing $3 million.
"We are going to be raising money immediately" — Shark Tank guest investor Emma Grede tries negotiating a deal with Kahawa Coffee's owner
While demonstrating her product, Kahawa Coffee's founder revealed coffee farmers, mostly women, were underpaid for their labor. Consequently, her company aimed to source the coffee directly from female farmers in Africa and ensure fair compensation. Moreover, customers were allowed to tip the female farmers and help them earn some extra cash.
Margaret handed out cups of coffee to the Sharks for tasting and received positive feedback from all of them. When Emma asked the founder to explain why female farmers were not paid fairly, Margaret shared that the money went into the hands of men since they were the landowners even though it was the women who harvested and processed the coffee.
She then revealed that customers had paid $10,000 in tips, which Margaret matched, adding another $10,000, impressing the Shark Tank investors.
They were equally amazed when Margaret revealed how much money her company made in sales. Kahawa Coffee had a year-to-date sales of $1.3 million and looked forward to closing that year at $4 million. Margaret aimed to make $10 million in the following year.
85% of the sales came from wholesale, whereas the other 15% came from direct-to-customer purchases. Margaret then shared that they launched at Trader Joe's the previous year, becoming the first black women-owned brand sold at any national chain.
The products cost $5 to make and were sold wholesale for $8. Hearing that, Kevin confessed he was not pleased by the margins. He then detailed his issue with the $7 million valuation and declined to invest. Emma, however, believed Margaret needed a bigger investment.
"You're gonna need a lot more than $350,000 and if I get on board with you we are going to be raising money immediately," she said.
The Shark Tank guest investor offered $350,000 for 12.5% equity. Robert Herjavec proposed partnering with Emma, offering an additional $350,000 for a 12.5% stake in her company. Meanwhile, Mark Cuban removed himself from consideration, stating that he liked to invest in companies that grew organically. Lori Greiner followed suit and refused to invest.
Margaret countered, asking Emma and Robert if they would consider giving $150,000 for 8% equity with a $200,000 loan. When the Shark Tank investors agreed to accept Margaret's offer, Mark and Lori re-entered the bidding war, putting the creator in a difficult spot.
Soon after, Robert proposed a solo offer, suggesting $350,000 for 8% equity. Emma matched Robert's offer and asked Margaret to make a decision. After some deliberation, Margaret closed the deal with Emma.
Shark Tank season 16 airs new episodes every Friday at 8 pm ET only on ABC.
