These 'Shark Tank' entrepreneurs got a deal with all 5 investors for $1.5 million

The business partners behind the xCraft drone company out of Idaho have the ideal "Shark Tank" appearance in episode 5 of season 7.

Founder, president, and CEO JD Claridge and board member Charles Manning step into the Tank seeking $500,000 for 20% equity and walk out with $1.5 million for 25% and Mark Cuban, Daymond John, Kevin O'Leary, Lori Greiner, and Robert Herjavec as investors.

Claridge, an aerospace engineer, founded xCraft in 2014 and recruited Manning, CEO of mobile analytics firm Kochava, to help him build the business-end of the company, VentureBeat reports.

Claridge and Manning impressed the Sharks with a video demonstration of the X PlusOne drone, which can be programmed to follow a flight plan, takes off and lands vertically, can climb to 10,000 feet, and can shift into "airplane mode," where it can fly at 60 mph.

Each X PlusOne costs $400 to make and retails for $1,800.

They launched a Kickstarter crowdfunding campaign for it last December and raised $143,000, locking down an additional $30,000 in sales on their website.

The guys also showed the Sharks a product still in development, the Phone Drone, a device that turns a smartphone into a drone. As Claridge explains, the expensive components of a drone - sensors, GPS, a camera - are already in the phone, and so they can keep production costs below $100 and retail it for around $300.

Because of its high price point and the legal restriction of being unable to recreationally fly a drone above 400 feet, the X Plus One is more suited to either enthusiasts or consumers using it for a professional purpose, such as landscaping. The Phone Drone can be a product for a more casual drone fan, who may want to use it on runs or climbs.

Herjavec asks Claridge and Manning to explain what their "secret sauce" is that makes them worthy of an investment over any other drone company.

Manning says that it's the intellectual property of the designs, and that the patent pending on the Phone Drone will make it a completely unique product.

John then asks the business partners why they went on the show. In an interview with local Idaho station KXLY that took place several months after their pitch, Claridge and Manning explain that a "Shark Tank" producer had sought them out, and they were excited to audition for a chance in the Tank. Back in the Tank itself, Claridge tells the investors that they would use $250,000 for inventory and $250,000 to finish the Phone Drone, under the guidance of a Shark.

"I think you need more money," O'Leary says, and then offers $750,000 for 25%, an uncharacteristically straightforward and generous deal for "Mr. Wonderful."

"You know what I smell?" John asks. "I smell a nasty, nasty Shark fight that's about to happen."

Here's how the bidding war goes down:

• Daymond John: $1 million for 25%.
• Kevin O'Leary: $1 million for 25%, with the benefit of someone who's been deeply researching the drone industry lately.
• Lori Greiner: $1 million for 20%.
• O'Leary: $1 million for 20%.
• Robert Herjavec: Also interested. Maybe we can work out a group deal.
• John: Let's do it among the four of us. A "big moneybag vulture" - Cuban - is waiting for us to offer a deal before he bests it and seals a deal.
• Manning: We thought about a situation like this and decided we'd love to have all five of you invest as a syndicate.
• John, O'Leary, Herjavec, Greiner: We're in. What's your offer?
• Claridge: Invest at a valuation of $10 million.
• John: Up from a valuation of $2 million? "I smell greedy people now." I'm setting a ceiling at a $6 million valuation.
• O'Leary: I'm setting a ceiling at 5% equity per investor.
• Mark Cuban: I might be interested, but won't confirm until I hear their final offer.

After having a private discussion in the hallway leading into the Tank, Claridge and Manning return to ask for $1.5 million for 25% equity, in which the five investors each invest $300,000 for 5% equity. The deal takes into account both John's and O'Leary's ceilings, giving the company a valuation of $6 million.

Cuban, who has been quiet during the entire deal-making process, has said in many interviews and past "Shark Tank" episodes that he is always skeptical of entrepreneurs' true intentions for appearing on the show. That they're pushing to invest with all five Sharks shows they're willing to make a deal rather than just seek publicity, but Cuban still wants to know if they're legitimate before he joins the group excitement of the other four Sharks.

"You guys are smart," he says. "Did anyone else offer you money before this?"

Manning explains that yes, they have, but a traditional venture capital seed round doesn't really interest them. They're excited by the opportunity to have the unique operational expertise of the Sharks.

"I deal with a lot of VCs, like we all do," Herjavec says. "They're super smart. But they don't get their hands dirty like we do." He believes Claridge and Manning, and O'Leary does, too. They communicate to Cuban that he shouldn't worry.

"That works," Cuban says, smiling. The five Sharks get up to seal the deal with a handshake and hug.

While the Sharks were certainly impressed by the xCraft products, they were most impressed by Claridge and Manning's confidence, knowledge of the subject and industry, lack of hesitation when answering, and ability to negotiate hard while knowing when to back off.

It worked perfectly.

"We have not only gotten a valuation that's greater than what we asked, we got more money than what we asked for (three times as much), and we got all five Sharks on board," Claridge says outside of the Tank.