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Vengo Labs founding CEO Brian Shimmerlik not only had the confidence to demand that “Shark Tank” investors Kevin O’Leary and Lori Greiner adjust their joint offer before he would accept their $2 million, he had the tact to pull it off.

Shimmerlik and his cofounder, Steven Bofill, left the Tank with $2 million in venture debt, to be paid over three years at 7% interest, in return for just 3% equity of their digital-vending-machine company.

Before arriving on set last summer for a Season 7 taping, Bofill told Business Insider he “never thought they’d get to a deal like that.

Shimmerlik and Bofill entered the pitch room seeking $2 million in exchange for 12.5% equity. They explained how they started Vengo Labs in 2011 as a way to revolutionize the vending-machine space.

Each Vengo machine is a compact, wall-mounted device that carries six products it advertises with video demonstrations and text.

The intention is to create something akin to an online-shopping experience but with an immediate reward, located in places where target consumers spend time already — like college dormitories.

The two entrepreneurs were able to garner interest in their idea from high-profile investors in their hometown of New York City, including Gary Vaynerchuk, David Tisch, and the NYU Venture Innovation Fund.

Before their “Shark Tank” appearance, they raised $3.4 million over a seed and Series A round.

Vengo operates by selling a unit to a vending-machine company for $2,500, breaking even, and then charges the purchaser of the unit a $20 monthly fee for access to the machine’s cloud-based software and maintenance insurance.

The owner of each unit can then arrange with Vengo to place their own products in the machine, as well as make use of the company’s network of partners, including brands like Hershey’s and skin-care company Kiehl’s.

Each brand is charged a monthly fee of $200 per unique product per machine per month — not a cheap price, but one that Shimmerlik said comes with an attractive margin for each partner.

Shimmerlik and Bofill told the Sharks that their business model would lead to $1 million in revenue in 2015, at a loss of $300,000, but that their growth would cause them to break even the next year.

Mark Cuban, Daymond John, and Robert Herjavec didn’t want to get involved, but O’Leary kicked off negotiations among himself, Greiner, and Shimmerlik. Here’s a summary of how it played out:

• Kevin O’Leary: Would you like to make a debt deal?
• Brian Shimmerlik: We don’t have any, but I’m open to it.
• O’Leary: I’ll give you $2 million in venture debt as a three-year loan at 7% interest, and I’ll get 6% equity in return for the risk. The three years will be sufficient to test proof of concept.
• Shimmerlik: How did you reach that 6%?
• O’Leary: I just asked for it. It seems fair.
• Lori Greiner: I like the concept, but I think the design needs work to be more appealing and useful.
• Shimmerlik: Kevin and Lori, would you be interested in splitting a deal?
• O’Leary/Greiner: Sure.
• Shimmerlik: We like the debt terms, but the 6% is much too high. We’ll give 1%.
• O’Leary/Greiner: We’d be working too closely with you for just half a percent each. No way.
• Shimmerlik: That’s my final counter.
• O’Leary: We can do 3% equity.
• Greiner: No, we should each get 2%. Let’s have 4%.
• Shimmerlik: We’ve already worked with investors and we know that’s below market value.
• O’Leary: Sharks can’t be held to those same standards. We are much more involved than a typical investor and can get you tremendously valuable exposure. And you’ll be getting not one Shark, but two.
• Shimmerlik: That’s a good point. I’ll make just one more counter: 2.5% equity.
• O’Leary/Greiner: We’ll do 3.5%.
• Shimmerlik: That’s still too much for us. My final offer is 2.5%. We’d love to work with you.
• O’Leary/Greiner: Our last offer is 3%.
• Shimmerlik: Deal.

Shimmerlik told us that the negotiation process went well for him because there was mutual respect between himself and the investors rather than condescension, and that it was fun working out a deal. “I could tell O’Leary loved it,” Shimmerlik said.

Following their “Shark Tank” appearance, the Vengo Labs team secured an additional $2 million from Armory Square Ventures in October. Vengo is planning to use its war chest to expand its reach to 1,000 units in four cities across four continents, and expect to make $2 million in revenue this year.

Shimmerlik explained that what makes the partnership with O’Leary and Greiner so appealing is not only their star power, but also their investments in a wide variety of Vengo-friendly products, like O’Leary’s Bottle Breacher bottle opener.

“It’s wild,” Shimmerlik said of the “Shark Tank” experience. “Totally.”

SEE ALSO: ‘Shark Tank’ investor Barbara Corcoran says blowing $67,000 was probably the happiest day of her life

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