Four years into our business journey, the sharks started circling – and we welcomed it. My co-founder and I were pleased to accept the opportunity to appear on Channel 10’s Shark Tank, the show where potential investors were the sharks and entrepreneurs the meat.
While our venture had started well, we were at the stage where we were ready to grow. An injection of capital and some guidance from veteran entrepreneurs sounded like just the thing to give us momentum.
My business, SpeedFit, had begun in 2013 after I saw a gap in the market in Australia. When I lived in Slovakia I had back problems and one of the remedies was EMS, or electronic muscle stimulation, a European technology that provides 20-minute high-intensity workouts designed for a range of people: from injured athletes and time-poor parents to gym-avoidant professionals and disabled clients. The technology worked and the market hadn’t yet bloomed in Australia, which made us leaders here.
Facing the sharks
The key to going on a show like Shark Tank is preparation, followed by confidence and a willingness to negotiate. I had run a few businesses back in Slovakia, so I was well versed in what we offered as a business and what we needed from an investor. We faced the sharks, armed with German technology and the latest European research on EMS, as well as a business plan to expand. A couple of them experienced a SpeedFit session and two of them – Janine Allis, best known for founding Boost Juice, and technology entrepreneur Steve Baxter – bit.
Baxter offered $280K for 40% of the business, which indicated he thought we were only worth $700K; in the end it was Allis with a final offer of $280K for 33% (valuing the business at $848K) with whom we negotiated. We were hoping for $280K for 10% because we believed the business was worth $2.8 million at the time. In the end, we walked away.
I was well aware at the time that, although the valuation was low, it may have been beneficial to have her on board as a mentor. Boost Juice is one of the best-known success stories of Australian franchising and it would have been advantageous to have her in our corner when expanding using a franchise system. But her offer was well below what we wanted, what we knew we were worth. When we said ‘no’, it was with confidence.
What happened next
I don’t know if it was Allis’ offer or our rejection of it, or simply because we had gone through the Shark Tank process and people recognised us, but leaving the show without a dollar of investment actually turned out to be the best endorsement for SpeedFit. Since that appearance, we self-funded the business and have gone from strength to strength.
SpeedFit had five studios going into Shark Tank in 2017, and just two years later we tripled that, growing through a franchise network from Perth and spreading to the east coast.
What our Shark Tank experience taught us was how to evaluate what we do and trust in that evaluation. Even when Baxter made his offer, he was a little dismissive about the business, believing EMS to be a fad. We knew already that we could not succeed with an investor who had that kind of attitude.
The most difficult part was trying to show rather than tell them that EMS was more than a passing trend, that its future had already been written in its popularity across Europe. Our role was bringing the best version of it to Australia, making the effort to educate and serve this market.
Believe in yourself
By backing ourselves, we’ve maintained full control of the business and the growing franchise, which has enjoyed year-on-year double-digit growth, in the competitive fitness sector.
We’re currently at 22 studios and expanding steadily into eastern Australia. We even bought three Melbourne studios from one of our closest competitors during the COVID lockdown period in 2020.
But I think one of my favourite parts of this story starts before Shark Tank, when I was studying fitness. So many of my peers gave me a hard time about bringing EMS to Australia, believing that it was too high-risk to succeed.
After my appearance on Shark Tank, my college invited me back to talk to the students on how to build a fitness business.
I was proud that I could share my journey with them and show that while everything does not always go to plan all of the time, great things can be achieved without necessarily having the backing of your peers.
I have come from humble beginnings, taken calculated risks, and followed my instincts, and to date that has served me and the business well.
- Matej Varhalik is CEO and co-founder of SpeedFit.