Why Kevin O’Leary invested in these entrepreneurs nearly 3 years after they missed a deal with him on ‘Shark Tank’

surprise ride shark tank

For the first time in seven seasons of “Shark Tank,” one of the Sharks has returned to invest in a company whose founders missed a deal during their appearance on the show.

In the latest episode of “Beyond the Tank,” the “behind-the-scenes” companion show to “Shark Tank,” it was revealed that Kevin O’Leary partnered with sisters Donna and Rosy Khalife, founders of the Washington, DC startup Surprise Ride.

“Now I own a piece of this company, I like what they’ve done so far — I’m going to pour gasoline on this fire, get this thing to $10 million in sales,” O’Leary said.

The Khalifes founded Surprise Ride, a craft kit subscription service for kids ages 6-11, in 2012, shortly after Donna received her MBA from Harvard Business School. Donna serves as CEO and Rosy as COO.

When they appeared on Season 5 of “Shark Tank” in 2013, they had acquired 220 subscribers over four months and were on track for $500,000 in annual sales for the next year. They were seeking an investment of $110,000 in exchange for 10% of the company, but the investors thought the $1.1 million valuation was unwarranted. Robert Herjavec offered the $110,000, but for 25%, and he became frustrated when the Khalifes negotiated harder. They left without a deal.

A couple years later, they agreed to appear on “Beyond the Tank” under the pretense that they were to be another example of founders who missed a deal on “Shark Tank” but flourished after the experience; they had no idea that O’Leary, who was very interested in the product back in Season 5 but found the valuation much too high, had kept an eye on the company’s progress.

Since the “Shark Tank” appearance, Surprise Ride not only exceeded its goal of $500,000 in annual revenue in 2014, but surpassed $1 million in annual sales last year. The company also became profitable, and the Khalifes are using profits to grow their team.

surprise rideIn classic reality show fashion, the “Beyond the Tank” producers had O’Leary make an unexpected appearance at the Surprise Ride headquarters.

His offer was far from a done deal, and he told them it was completely non-negotiable: He would invest $50,000 for 2.5% of the company, and would profit from a 6% royalty on every product sold until he made $150,000, at which the royalty would disappear. The sisters hesitated a moment, but then happily agreed to it.

Rosy told DCInno’s Eric Hal Schwartz that the $50,000 was intended solely as a way for O’Leary to kick off a partnership. “Fifty grand isn’t much compared to what a startup needs to grow, but it’s not about investment in terms of monetary value,” she said. “It’s about Kevin’s marketing value. That’s worth millions in itself. We’re excited to be working with him on customer acquisition and growth.”

O’Leary, who goes by the nickname “Mr. Wonderful,” told the Khalifes that Surprise Ride would become the newest member of his Something Wonderful Family, a collection of his favorite “Shark Tank” investments that he markets together for family-friendly event planning.

O’Leary said another reason he wanted to bring Surprise Ride into his portfolio was because he realized over the past year that his most profitable “Shark Tank” investments have female CEOs. He told the Khalifes that he’s not exactly sure why that is, but he’s at least found from his own experience that his female CEOs are less volatile and better planners than his male leaders.

“Surprise Ride is at an interesting juncture,” O’Leary said on “Beyond the Tank.” “I think these girls have learned a lot since they appeared on ‘Shark Tank’ and I think they’ve learned from time that you don’t want to take an opportunity and squander it.”

SEE ALSO: How this ‘Shark Tank’ entrepreneur negotiated hard for a $2 million deal with Kevin O’Leary and Lori Greiner

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