“Crowd Gifting” Couple Survives The ‘Shark Tank’

By Robert Digitale
The Press Democrat, Santa Rosa, Calif.

Sebastopol’s Honeyfund drew a crowd in the “Shark Tank.”

The honeymoon “crowd-gifting” business got a moment in prime time Friday night on ABC’s hit reality show, and owners Sara and Josh Margulis walked away with $400,000 in new funding to grow their portfolio of websites that allow users to give money for brides and grads, birthdays and anniversaries.

“It was wonderful and validating to get offers from these people who really know business and are really sharp,” Josh Margulis said Tuesday.

Not that the TV show’s star investors didn’t drive hard bargains, quickly setting aside the couple’s offer to sell them 10 percent of the business for $400,000. At the end of the presentation, two of the five multi-millionaires countered by demanding a 30 percent share in the business in exchange for the money.

But the Margulises eventually selected a third offer from venture capitalist Kevin O’Leary. Sarcastically tagged “Mr. Wonderful” by his colleagues, O’Leary offered to loan the couple $400,000 without taking a stake in Honeyfund. Instead, he asked the couple to give him a third of the company’s net transaction revenues until he recouped his loan, plus an additional $800,000 — for a total of $1.2 million.

Rival shark Robert Herjavec warned the couple that O’Leary’s offer was “unequivocally .?.?. a bad idea” because he would only care about getting his money back rather than growing the business. But the Margulises stuck with the offer and said they are convinced O’Leary also will give guidance, contacts and media savvy.

“We’re thrilled to have Kevin on our team and we’re confident our partnership will be for the long term,” Sara Margulis said Tuesday.

Founded in 2008, Honeyfund has raised nearly $238 million for brides and grooms who set up a different sort of bridal registry.

On its website, friends and family can help pay for a honeymoon, including meals, special outings, hotels and airfare.

The business makes its money from a small cut of transferred funds using PayPal and by selling couples premium services for their site pages.

Last May the Margulises launched a second site, Plumfund, for other gift-giving events such as birthdays, baby showers and graduations.

Initially, the couple wasn’t familiar with “Shark Tank,” which won an Emmy this year and is the most-watched TV show on Friday nights.

Over the past five years, the TV sharks have offered more than $45 million to bankroll all sorts of entrepreneurs.

In January the Margulises were contacted by a show staff member who had used Honeyfund. The couple soon watched plenty of episodes. And when the show was taped last summer, the investors quickly became familiar with Honeyfund.

Under questioning, the Margulises revealed that their websites raised $67 millions for newlyweds last year, which translated into $987,000 in business revenue and $217,000 in profits. The company has captured about 30 percent of the market.

Among other things, the couple will use the new funds to help launch a honeymoon site for Spanish speakers.

Appearing on the show prompted Honeyfund sign-ups to jump 245 percent from Friday to Sunday compared to the previous weekend, the couple said, with a 2,500 percent jump for the smaller Plumfund.

After standing before the sharks, Sara Margulis said she was struck by how quickly they grasped the fundamentals of her business and how quickly they calculated their offers.

“It’s remarkable and it makes the show really fun to watch,” she said.

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