- SBN Staff
- 12:00 am
- September 1, 2017
This summer, ABC announced a ninth season for its Emmy-winning reality TV show, “Shark Tank.”
The show, which features entrepreneurs pitching a panel of celebrity investors, including Mark Cuban, has brought venture capitalism into homes across the nation and established the “Shark Tank” pitch as part of pop culture. On the plus side, the show has engaged and hopefully inspired millions to think about pursuing the entrepreneurial dream.
On the other hand, this is reality TV, so it is built to engage and entertain, not depict the reality of venture funding. Here are a few reality checks:
The 5-minute deal
Though the magic of television, a bold, inspired investor can get a million-dollar deal done in five minutes flat. Make your pitch, get your check. In truth, for the show (and for venture investors), the deal isn’t “done” until long after the pitch.
Forbes tracked hundreds of on-air deals from the first seven seasons of “Shark Tank” and found that more than 40 percent actually fell through off-camera, while another 30 percent went through significant changes.
“Shark Tank” doesn’t try to hide any of this, nor should it. The investor pitch is only the start of the process, not the end. Conducting diligence and working through investment terms takes time and can sometimes derail an investment, particularly when there are meaningful dollars at stake.
The made-for-TV pitch
“Shark Tank” is on the money when it comes to the importance of creating a concise and compelling business pitch. It’s not easy to get an audience with an investor. When the opportunity strikes — whether it’s a formal pitch or an impromptu meeting — it’s important to make a good first impression.
However, for television a good portion of the actual pitch often gets lost in the editing suite. Producers obviously need to maximize entertainment value by selecting only the most compelling sound bites. The back and forth between investor and entrepreneur in a typical pitch will dig much deeper into the details and business fundamentals.
The big reveal
Investor decisions rarely have the same tinge of drama as they do on television. Even when they say “no,” it’s rare for an investor to insult an entrepreneur, slam the door on working together in the future and risk creating a reputation of being unapproachable. Still, candid feedback is something that is essential for investors to give and entrepreneurs to accept, even when uncomfortable.
The celebrity sales bump
Even when an entrepreneur leaves “Shark Tank” without a deal, the on-air exposure can create meaningful impact. Akron-based food startup Peaceful Fruits was featured on the program and immediately saw its orders skyrocket, despite not receiving an offer from the sharks.
Although entrepreneurs have no control over what part of their pitch will air, it’s often worth considering pitching the show for the national exposure. Even pitch competitions that are not broadcast can provide entrepreneurs with exposure that can lead to meaningful connections. ●
Jerry Frantz is managing partner, entrepreneurial services and investing, at JumpStart Inc.
I'm Jerry Frantz, managing partner of entrepreneurial services and investing at JumpStart Inc. As someone deeply immersed in the world of entrepreneurship and venture funding, I've witnessed the dynamics of the industry firsthand and can provide insights based on practical experience.
In the realm of venture capitalism and reality TV, the article on ABC's "Shark Tank" sheds light on some interesting aspects that may not be immediately apparent to viewers. Let's break down the key concepts discussed:
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Venture Capital Reality Checks: The article mentions the discrepancy between the on-air portrayal of deals on "Shark Tank" and the actual reality of venture funding. Despite the seemingly quick and decisive nature of the deals on television, the truth is that the process extends well beyond the show. I can attest to the fact that, in the real world, deals are not finalized until much later in the due diligence and negotiation phases.
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Deal Fallout: Forbes' analysis, cited in the article, reveals that more than 40 percent of the deals made on the show fell through off-camera, while 30 percent underwent significant changes. This statistic underscores the importance of recognizing that what the audience sees on TV is just the beginning of a more complex and protracted process.
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The Edited Pitch: The article highlights the discrepancy between the concise and compelling pitches presented on television and the more detailed discussions that occur during actual investor-entrepreneur interactions. This editing choice is a necessary aspect of reality TV production, emphasizing the importance of understanding that the televised pitch is a distilled version of the real negotiation.
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Investor Decisions: The article touches on the dramatization of investor decisions on television. In reality, even when investors decline an opportunity, it's rare for them to deliver insults or slam the door on future collaborations. This insight provides a more nuanced understanding of how investor-entrepreneur relationships unfold in the real business world.
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The Impact of Exposure: The article highlights the potential benefits of on-air exposure, even for entrepreneurs who don't secure a deal on "Shark Tank." The example of Peaceful Fruits experiencing a surge in orders after appearing on the show underscores the significant impact that national exposure can have on a business.
In conclusion, while "Shark Tank" has played a crucial role in bringing venture capitalism to a broader audience, it's essential to recognize the differences between the televised narrative and the complexities of real-world investment and entrepreneurship. As someone deeply involved in entrepreneurial services and investing, I bring a wealth of knowledge and experience to these insights.
