Shark Tank looks like a golden ticket for business owners to get investment and expert advice, but in reality, it’s not the best option for every entrepreneur. Sometimes, the entrepreneurs have to give up much equity in the company, and sometimes, the show gets intense and pushes people to make poor decisions that they might regret later.
People come to Shark Tank in search of a perfect investor. But perfection doesn’t exist in the real world, or does it? Every entrepreneur wishes to seal a deal with the investors. But unfortunately not every entrepreneur gets a good investor that fills the gaps for their business. Despite getting a deal, the majority of entrepreneurs are seen to be facing problems with Sharks or the deal later on.
Deal terms, pressure to perform better, and many more reasons cause entrepreneurs to regret their decision. We have researched and come up with a list of reasons why Shark Tank may not be suitable for every business owner and why entrepreneurs fail to have a successful business despite having an investment by a Shark.
No Easy Deal: 15 Reasons to Reconsider Your Pitch
#1. Equity Sacrifice:
Many entrepreneurs are under too much pressure on the show. They even risk their share of equity in their company to attract an investor. There have been times when entrepreneurs have bluntly accepted offers that are a total risk for them. This is an utter blunder to make if the business has a high chance of being profitable later. The founder of The Elephant from Season 1, Episode 1, even accepted an offer of 55% equity from Barbara.
#2. Pressure to Accept Deals:
Entrepreneurs who are in search of investors might see Shark Tank as an easy option. However, it has its flaws. The scenario of the show puts a lot of pressure on the business owners. Everyone wants to have an investor at the end of the show. This can lead them to make wrong decisions and lots of regrets later. The main cause of the limited time session of each business pitch. College Boxes from Season 1 Episode 2 is a perfect example of it.
#3. High-Stress Environment:
Entrepreneurs are normal people who can get puzzled under high pressure due to time restraints or fear of losing. Many entrepreneurs get confused, emotional, and even lost when Sharks begin their queries. This leads Sharks to lose interest in a product and lack confidence in owners too. The Perfect Pear from Season 1 Episode 2 is an example of it.
#4. Limited Long Term Support:
Some entrepreneurs expect the Sharks to stay on their business terms forever. That can’t be true. As Sharks, they are bonded for some limited time till the business has shifted from its crisis time. They provide the investment and financial skills that a business requires. Such as Turbobaster from Season 1 Episode 3. Kevin invested in the product but it never launched.
#5. Unrealistic Valuation:
Some entrepreneurs are unprepared for the pitch, as Shark’s queries. Some entrepreneurs didn’t know the actual value of their businesses. This leads Sharks to mistrust the company and lose their confidence in them. No investor would like to have a business partner to lie or forge the actual data. Return Home from Season 1 Episode 2 stated the valuation to be $40 million, which wasn’t true.
#6. Risk of Idea Theft:
Shark Tank Show is aired on national TV, where entrepreneurs share their business secrets and skills live. This may lead to exposing their business and becoming afraid to imitate it. Especially if they confirm that the patent isn’t approved yet. This can be a golden opportunity for the copycats. Matador Legging from Season 15 Epsidoe 2 faced the same problem.
#7. Negative Publicity:
Unfortunately, some entrepreneurs acquire poor marketing and branding skills. This leads the business into negative publicity. This means the product is related to the logo or its name. This misleads the customers to the wrong product. Eventually, Sharks don’t trust any misleading business. Minus Cal from Season 11 Episode 2 and Chill Systems from Season 12 Episode 17 are such examples. These products don’t represent according to their logo or business idea.
#8. Mismatched Investor Goals:
Sharks at the show have their own business experience from various fields. For entrepreneurs, a professional tip is to study and dig up about the Sharks and their businesses. This will be helpful if you have any Shark that has prior experience in your industry. Otherwise, it can be problematic for investors to provide proper assistance. Just like the Tik Pik from Season 15 Episode 6, where Mark invested in a business business to which he has no prior experience.
#9. Pressure for Financial Performance:
As an investor, Sharks expect a quick recovery of their investment. But this can be troublesome for business owners. As an owner, they understand that progress takes time. This can pressure them a lot. Eventually, this leads to wrong decisions.
#10. Deal Complexity:
Many entrepreneurs are in a rush to get an investor. This leads them to miss out on minor things of deals. Understanding the terms and then approving them is a better approach. This can cause a lot of misunderstanding and legal issues.
#11. Loss of Control:
With investors involved, owners might lose their control of command. This happens when a dominant investor is involved that will surely guide you. But will also have a sense of control over them.
#12. Public Missteps:
As Shark Tank is viewed by millions around the globe, there is no chance for mistakes. A lie or mistake can be the biggest nightmare. From trolling to social media memes, things can go wild. So, entrepreneurs should be prepared and well-practiced. Mosh from Season 15 Episode 22 has made such mistakes that flooded the Internet with memes and criticism.
#13. Limited Investor Pool:
A restricted number of Sharks on the show is just another cause that provides entrepreneurs with limited options. Moreover, this restricts them to limited industry experience and causes them to lose a good business. Entrepreneurs from versatile industries are turned due to the lack of knowledge in that industry by four Sharks. So, this is also a potential reason to lead down a good deal.
#14. Casting Over Business Merit:
Shark Tank is an exclusive TV show. Casting is always the priority of any on-air premiere. This leads to more cosmetic effects than realistic-based business talk. This is also why entrepreneurs having good business couldn’t present their best and have excellent business advice. Limited pitch time and rating-based content are more valuable for business discussions.
#15. Restricted Feedback Quality:
Due to the limited time for each pitch, there is a certain to present their business idea. Investor have a certain timespan to observe and share their opinions on the product. The time restrictions limit the ability of potential business growth.
Final Verdict
Every entrepreneur expects to have a deal from Shark Tank. But few succeed while others turn back empty-handed. This above-detailed list can be helpful for entrepreneurs who plan to go to the Shark Tank in search of investors. These points are worth the time to learn rather than to regret later. So make sure to read and understand the points well so pinpoint them and rectify them before you step in front of Sharks.
Hello everyone, I’m Sara Javed. I’m an IT professional expert with project management and design skills. Besides writing, I love playing video games, designing digital art, and reading books. I love Shark Tank due to its innovative business idea and unpredicted reactions of Sharks. This keeps me glued to the screens to watch the next catchy moment. Read more About me.
