- Entrepreneurs: Abhisek Baheti, Divyajeet Baheti
- Business: Smartwatches
- Ask: ₹2 Cr for 5% equity
- Valuation: ₹40 Cr
- Result: ₹ 1 Crore for 10% Equity and ₹ 1 Crore debt @15% interest
- Sharks: Anupam Mittal and Vineeta Singh
Shark Tank Pitch:
Watchout Wearables is a startup that manufactures smartwatches for kids, featuring a camera, video calling, GPS tracking, and real-time messaging. The primary purpose of the product is to ensure that kids are connected with their parents at all times. The watches are entirely designed in-house, including the software. The sharks were intrigued by the product and its market potential, but they also had doubts about the valuation, competition, and the scalability of the business.
One of their key differentiators from other smartwatches is that their device can contain a SIM card, allowing it to stay connected at all times and function as an independent device. Additionally, it includes an SOS feature; pressing it for over 3 seconds notifies parents and provides a recording of the surrounding sound from the last 30 seconds, along with the location. Another important feature is Class mode to avoid distractions.
Abhishek explained that he founded the company in 2018 and had sold over 3000 units of their watches so far. They generated ₹1.1 Crore in revenue in the Financial year 2021-2022 and ₹1.4 Crore in FY22-23, with ₹25 Lakh in revenue recorded in August 2022. He claimed that their watch was unique and superior to other products in the market and that they had a loyal customer base. Their plan is to expand to older adults as well.
Shark Tank Negotiations:
The sharks were impressed by the sales and feedback but still felt that the valuation was too high. They also questioned the profitability and unit economics of the business. They asked Abhishek about the cost to manufacture one watch and its selling price. Abhishek responded that it costs ₹3500 to make one watch, which sells for ₹11,999.
The sharks did some quick calculations and realized that Abhishek was achieving a gross margin of around 70%, which was very high for a hardware product. They asked him why he was charging such a premium price for his watch and whether he had any patents or intellectual property rights to protect his product. Abhishek said that he was charging a premium price because his watch offered premium services and quality to his customers. They told him that his valuation was unrealistic and unreasonable and that they would not invest in his business at that price.
Abhishek tried to defend his valuation and persuade the sharks to invest in his business. He said that he had a vision to make his watch a global brand and a household name. He also emphasized his strong team and proven track record. He asked the sharks to give him a counteroffer or a term sheet.
Aman said that the price was still too high, so he suggested Abhishek lower it, but he withdrew from the deal. Peyush appreciated the product and expressed interest in being a customer, but he also believed the price was too high and withdrew from the deal. He added that he couldn’t come close to Abhishek’s valuation. Namita followed suit, citing similar reasons.
Anupam and Vineeta were interested in the company and offered ₹2 Crore, with half of it being debt at 15%, in exchange for 10% equity. Abhishek accepted the debt but countered with 1 Crore for 5% equity instead. Anupam stated that the market, not the founder, determines the valuation, so they stuck to their offer. Abhishek took some time to think and talk to his father, then returned with a counteroffer of 7.5%, but the sharks declined. Eventually, Abhishek accepted the offer and moved forward with the deal.
What do you think happened to Watchout wearables after shark tank?
Our research on the brand revealed that the deal with the sharks closed, and as of September 2023, Watchout Wearables is still going strong. They are available directly through their website and on Amazon. They claim to be India’s #1 kids’ smartwatch brand on their social media. They have received positive feedback from customers and the media. They maintain a vision to make their watch a global brand and a household name.
Image source: Watch out wearables Instagram
Here are the other companies that appeared in Season 2 Episode 2!
2 thoughts on “Is WatchOut Wearables out of business after Shark Tank India?”