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Anyone catch the latest episode of Dragon's Den Canada yesterday? http://www.cbc.ca/dragonsden/ I think that's only viewable in Canada, but Canadians, play the video and watch the first pitch. These kids develop an iPhone app for tracking and recommending your workouts. They're asking $100,000 for 10% of their business. Their plan for generating revenue is converting users from their free app to pro at $4.99/mo, $29.99/yr. So far, 12,000 downloads on their app, and they say 1% are converting to paid. That means 120 paid users, averaging say $15 each, so they've made roughly $1,800 in revenue. What the hell? $1,800, and they value their company at one million dollars? They're not even paying themselves, and they're in one of the most saturated niches in the world, with already countless others well established and successful in that market. What blows my mind even more, one of the investors offers $100,000 for 20%, with 25% royalties until they're paid back. They turn it down. |