Happy Monday! This week's SBJ magazine highlights the 25 best sports studio shows in the industry. As part of the package, my colleague Tom Friend writes about "Inside the NBA" and its massive impact on so many of the shows that are successful today. - Ethan Joyce
In today's edition of Power Up:
- TruFit Customs thrives in "Shark Tank" pitch
- Evolv Technology announces internal investigation
- University of Illinois re-signs with drone protection provider
How TruFit Customs walked out of Shark Tank with an investor deal for their 3D-printed mouthguards
When TruFit Customs founder Matthew Hall walked onto the set of Shark Tank to pitch his custom-fit sporting goods, he launched right into the benefits of his company’s flagship product, a mouthguard.
Hall touted its 3D-scanned-and-printed manufacturing for a personalized fit as well as its “shockwave-dampening compression pads, sleek, slim profile and [they] are cut so you can breathe and speak as clearly as I am talking to you now.”
“In fact,” Hall added, before pausing and removing a white mouthguard from his upper teeth that had gone unnoticed by the investors, “I’m currently wearing one.”
The ABC cameras then showed venture capitalist Rashaun Williams chuckle in appreciation. By the end of the episode, Hall had two investment offers — from Williams and Kevin O’Leary, aka “Mr. Wonderful” — before shaking hands on a deal with Williams.
On the show, Hall asked for $750,000 for a 5% equity stake in TruFit, a company valuation of $15 million. O’Leary offered $750,000 for 3% so long as he also received $2 on every unit sold up to $2.25 million. Williams countered with $750,000 for 10% with the added promise of bringing 10-to-20 pro athletes from his network into the business as ambassadors and/or investors.
Williams is the founder of Value Investment Group who has invested in more than 170 companies, including into Robinhood, Coinbase, Casper, Ring, Lyft and Dropbox in the early stages. He is also a limited partner of the Atlanta Falcons .
“It blew everyone's mind,” Williams told SBJ. “Show me. Don't tell me. So I was just sitting there thinking this is a handsome, tall guy with perfect teeth, right? I had no idea. Any other mouthguard in his mouth would have looked crazy. He took this thing out, and it was it was perfect demonstration, pitch and delivery right there on the spot.”
The episode aired last Friday as the opener to Shark Tank’s Season 16. Immediately, Hall said consumer sales grew tenfold over the first five days and numerous inquiries from suppliers, researchers and business strategists. TruFit’s website currently offers a $30 discount with the promo code “SHARKTANK,” reducing the mouthguard price down to $95 each. On the show, Hall said his expenses, including shipping, are $31 and an average customer acquisition cost is $23, leaving a 40% margin for the business.
“This appearance is a big first step for us on a national stage to really show what the service is all about,” Hall said. “It's helps us get closer to what our mission is to make custom-fit affordable, convenient and on demand, not just perfect for professional athletes, but for everyone.”
TruFit already supplies half of all NFL teams with mouthguards as well as the Premier Lacrosse League and NHL and NCAA teams. It is now accepting pre-orders for custom insoles, although anyone watching Shark Tank would not have heard mention of this second product. The insoles appeared in the on-set display, but the conversation around the larger business plan was cut, which Hall said was a credit to the Shark Tank editors for keeping it focused.
The challenge in preparing for the appearance was knowing that he was pitching the sharks for investment while also wanting TV viewers to be interested in buying the mouthguard, which he positioned as being significantly better than cheap, boil-and-bite versions but also less expensive and less hassle than getting fitted in a dental office. (Enterprise sales include an iTero Element intraoral scan while consumers receive an impression kit at home with silicon putty.)
“That's our main, flagship product,” Hall said of the mouthguards, “but we have this whole service of direct-to-consumer, on-demand, custom-fit [products]. You don't want people to get lost in all that, but it's still worth mentioning because it makes it an investable company. So you're pitching not only to the customer that is going to purchase the product, but also the investor who's going to be investing in the company and they want something more of a larger story.”
“[Williams] got the business right away,” Hall said. “He has a better network within that community. And so just feeling my gut, Rashaun seemed like the right guy and then even further I got to experience that when I met the team.”
Williams said his team can act as “an accelerant” for the business as Hall grows the TruFit brand and executive team, while acknowledging the success the founder has already achieved, particularly in the competitive pro sports market.
“I know how many different skillsets you need,” Williams said, “to have to figure out a market that's being underserved, come up with a better product, create the manufacturing, market that product, and then cold-call blitz all of these individual teams who get called 100 times a day and then actually make money from it.”
Evolv Technology delays financial reporting amid investigation
Evolv Technology announced an internal investigation into its sales practices, prompting the company to warn shareholders and the general public to not rely on past quarterly financial reports from Q2 2022 through Q2 2024.
The investigation is being carried out by an ad hoc committee of independent directors from its board, which will determine whether the sales of products and subscriptions to certain channel clients and end users were " subject to extra-contractual terms and conditions that impacted revenue recognition and other metrics, and if so, when senior Company personnel became aware of these issues,” according to a statement released on Friday.
While the investigation is still ongoing, the committee has already determined that certain sales – which includes a deal with one of its largest channel partners – featured misconduct from Evolv personnel, with extra terms and conditions that were not shared with Evolv’s accounting department, its board’s audit committee and its independent accounting firm, PricewaterhouseCoopers (PwC). This has resulted in, the committee preliminarily estimates, in approximately $4-to-$6 million in premature or incorrect revenue recognition in sales transactions on a net basis.
Evolv has also delayed the release of its Q3 2024 report as well.
Debevoise & Plimpton LLP has been retained by the Evolv committee as legal counsel, while also leaning on independent legal counsel Cleary, Gottlieb, Steen & Hamilton and forensic accounting firm Ankura Consulting Group. Evolv has reported this to the SEC.
In February, the company announced that the SEC had started an unrelated investigation in the company. On Friday, Evolv also shared that is still cooperating with that investigation as well.
Evolv’s Evolv Express weapons screener won Best in Fan Experience Technology and Best in Sports Technology at the second annual Sports Business Awards: Tech earlier this year. The company works with more than 40 sports clients across the top five men’s North American leagues and colleges.
University of Illinois continues relationship with drone detection company
Airspace security company SkySafe recently received a two-year extension with the University of Illinois to safeguard the school’s sporting events with its drone-detection technology. The partnership, SkySafe’s first in the sports industry, started originally in August 2023.
SkySafe uses cloud-based drone detection to identify illegal flights and determine pilot location. The platform can also produce a forensic report to use in criminal cases should there be an incident.
In its work with Illinois, SkySafe has picked up more than 7,500 drone flights and also stopped a flyover taking place during an Illini football game in September.