Armed with a new business model and a dash of Texan charm, Nikki Pope went on ABC’s “Shark Tank” and convinced billionaire Mark Cuban and venture capitalist Kevin O’Leary to invest $200,000 in Toygaroo.com, a startup company she describes as a Netflix for toys.
The 30-year-old entrepreneur appeared on the March 25 episode of the reality show, which gives entrepreneurs the chance to make a pitch in front of a panel of famous rich folk looking for investment opportunities.
Pope, who moved to Los Angeles from Houston more than a year ago, said the infusion of cash came at a good time for her business.
“It took the pressure off and opened the door for us to expand the inventory rapidly,” Pope said at Toygaroo’s headquarters in Silver Lake.
She was a little nervous going into the televised pitch, but quickly relaxed.
“Once I started talking to those guys, I forgot there were cameras,” she said.
Toygaroo, which officially launched in January, allows parents to rent toys via mail delivery for their kids instead of buying them. Customers sign up for a monthly plan that can range from $24.99 to $42.99 depending on the number of toys they want in each shipment.
Renting toys – and returning them – is practical in two ways, Pope said. “It’s a great way to reduce the clutter in the home, and a great way to save money.”
The “Shark Tank” investors were sold. O’Leary and Cuban agreed to team up to invest in Toygaroo in exchange for a 20 percent ownership share for each.
Located between a liquor store and an auto body shop on Fountain Avenue, the fledgling company is housed in a space that had previously been a restaurant then an online marketing firm. Its main room is filled with shelves of shrink-wrapped toys. Other rooms are devoted to packaging and cleaning toys once they are returned by customers.
There are more than 500 toys available on the site targeted for newborns through kids about 5. Among the brands are Baby Einstein, Discovery Toys, Fisher-Price and Playskool. Pope is also adding lesser-known brands as she strives to offer some items that are hard to find elsewhere.
Wholesale purchasing from the brands means lower prices, and Toygaroo gets preferred rates from FedEx, too.
The toys are sent to customers in a cardboard box marked with Toygaroo’s logo. A return postage label is included for the previous toys to be returned in the same box.
When the toys are returned, they are steam-cleaned and wiped down with organic sanitizers. Batteries are checked and replaced if necessary, then the toys are shrink-wrapped and returned to the shelf until they are ordered by someone else.
Pope said the company keeps an eye on the condition of each item.
“We’ll ship a toy that looks gently loved but we don’t want to send toys that look like they’ve been through a battle,” she said.
Toygaroo has 1,750 registered subscribers, thanks largely to the “Shark Tank” airing last month.
“You don’t have a million-dollar business yet,” O’Leary told Pope during her appearance. “But I want to be an investor in it. You have a good idea. I trust you. You know what you’re doing.”
But toy industry analyst Jim Silver isn’t as bullish on the company.
“There are a lot of families that aren’t going to want a toy that was living in somebody else’s house,” said Silver, editor of TimetoPlay.com. “It could appeal to a certain niche, but it’s a small niche. There’s nothing like getting a new toy. Most toys that land in a house aren’t gone in a month. It goes in the closet for three months and comes out again.”
Pope doesn’t feel that assessment will hold her back.
“Right now I’m just so humbled at the response,” she said. “My hope from day one with this company is that Toygaroo is the way that parents provide their children with toys.”
Pope and her partners, who include her husband, Julian, and people she knew through various online marketing jobs, had been planning Toygaroo for two years and had pooled their resources to come up with $50,000 for the launch.
Pope said she has learned everything she needs to know about toy habits from her 11 siblings, and 13 nieces and nephews younger than 8.
“I hang out at the houses of my sisters and my brothers and saw the toys piling up,” she said. “It started some conversations on how we could eliminate some of the toy problems.”
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