Tag Archives: venture funding

Shark Tank– TV Reality Show– Epitomizes the Frenzy of Investors Vs. Entrepreneurs in Deals for Funding Ventures…

The Shark Tank (TV reality show) is a prime-time feeding frenzy where investors (sharks) compete among themselves over investing in aspiring start-ups, while ruthlessly chew-up the founding entrepreneurs who are often unprepared in pitching their business… It’s unscripted, real-life drama were neither the sharks (who invest their own money) or the entrepreneurs (who represent a wide range of ventures) are actors. Sharks are multi-millionaire, multi-billionaire angel investors who made their marks, achieved their own brand celebrity… According to Allen Taylor; Shark Tank is more than just entertainment there are real business lessons to be learned… 

First and foremost, even if you are not an investor or entrepreneur you won’t get anywhere in business if you don’t know your value… The best way to win in business is to be prepared. Entrepreneurs who get decent deals on Shark Tank are the ones who know their numberswho anticipate questions while in the hot seatwho respond truthfully, intelligently… and then just maybe they walk away with a deal… In the world of business it’s either– eat or be eaten… You may not be a predator but if you don’t ‘think’ like one, you may very will be next predator’s meal... Hence, if you think like a shark you can avoid serious mistakes and survive to conduct business another day…

In the article Fact-Checked Shark Tank Deals by Emily Canal writes: On Shark Tank, the deals that are made on camera often are not the deals that are finalized… Some entrepreneurs walk away with life-changing deals, but more often than not, those on-air hand-shake agreements change or fall apart after taping. FORBES found that 319 businesses accepted deals on-air in the first seven seasons of Shark Tank and interviewed 237 of those entrepreneurs and discovered 73% did not get the exact deal they made on TV. But tweaked terms or dead deals don’t necessarily spell doom for a business; for many contestants, just the publicity for appearing on the show ended-up being worth more than the deal…

About 43% of participates interviewed said their deals didn’t come to fruition after the show. They attributed this to sharks pulling out of the agreement or changing terms to ones that didn’t work for them. Others canceled deals after getting term sheets that included unappealing clauses… Another 30% of participates interviewed said the equity and investment amount offered on-air changed after taping, but they chose to take the deal anyway. They said that the changes often occur during negotiations or in due diligence– investigations into a participate or their business before signing a contract… The goal of entrepreneurs going on Shark Tank is to make a deal, but if it falls apart it’s not always a tragedy. About 87% interviewed that didn’t get deals are still operating, and the others either; closed, acquired, sold…

In the article Leadership Lessons from the Shark Tank by Executive Forum writes: Whether you’re an aspiring entrepreneur or a leader in the corporate world, there is so much to learn about leadership from the Shark Tank:

  • Have vision: Sharks receive pitches all day, every day. Sometimes they invest in a product but more often than not, they invest in a vision. They’re not interested in the short-term win of selling a million widgets, they’re looking for the opportunity to dominate a new market, revolutionize a process, change the world… They want to see the vision beyond immediate strategy. Vision must come first, and a mature organization is no different. Yes, a new product or service might help you hit your numbers, but what’s the vision for where the organization is headed by 2020? When the right vision is in place, strategy will follow…
  • Know numbers: No matter how cute, flashy, or funny the pitch, if you don’t know the numbers, you won’t get a deal. At least once per Shark Tank episode, someone enters the tank with a decent idea but with no financial acumen to turn that idea into a profit. How did you arrive at your valuation? What does it sell for? What is the cost to produce? How big is the market? What is customer acquisition cost? These would seem like basic questions that any entrepreneur seeking investments would have prepped, but they don’t. Do the homework and be ready with answers that inspire confidence…
  • Read body language: Keeping an eye on which shark(s) is leaning forward, who just crossed their legs, who is taking notes, and who is nodding or tilted their head to the side… that can make all the difference. In the game of boardroom poker, these can be ‘telling’ signs that you need to not only pay attention to, but use to adjust your presentation…
  • Be all-in: The sharks rarely invest in part-time entrepreneurs. The sharks always say that if you don’t believe in the product enough to take a full-time leap of faith, then they shouldn’t either. Hence, no one wants a part-time leader either; so if employees think that you are not fully committed to the vision of the organization, then they won’t either…
  • Show passion: Passion is contagious. While numbers and proven track record are important they are not the only influencing factors. Time after time, sharks invest in a person rather than a product. They invest in a person because they believe that with passion and drive, and even if the product itself fails, the person is worth the investment. They’re willing to take a risk just to see where that person can take them in the future… Hence, a truly inspiring leader can do the same thing. Employees will follow a leader who has– vision, passion, energy… because they believe that they can create an exciting future…

In the article Shark Tank Teaches About Negotiation by Jerry Jao writes: Sharks mostly ask thoughtful questions so as to challenge an entrepreneur to think about their business beyond the scope that they have already defined… During negotiations sharks are looking for how an entrepreneur thinks, their insight, willingness to think in new ways. Negotiation is key part of business; learn to judge value, make good decisions on the fly, know when/how to counter-offer…

Seeing people under pressure is what makes Shark Tank an exciting and educational show to watch. However as a professional, you’ve got to keep your cool… If you’re feeling the heat and think that taking the offer is the best decision, you’re probably wrong. Step back take a deep breath, then consider the offer(s) soberly… Ask: What’s wrong with it? What’s right with It? If there are red flags then think about possible alternatives, before turning it down… Business people who make rash decision under pressure never come out winners…

Appearing before an audience of millions while getting drilled by experts will force you to think on your feet… Business people who can’t plan on the fly while the heat is rising will drown… If you don’t like an offer make a counter-offer: You have nothing to lose. The saddest outcome that happens on Shark Tank is when entrepreneurs, passionately pitch ventures, but then turn down the offer(s) without countering…