ABC’s hit TV show “Shark Tank” explores the interaction between hungry investors and startup businesses searching for capital to help their companies grow to the next level. Entrepreneurs present their existing businesses and ideas to the investors (sharks) with the hopes of convincing them that their company is a worthwhile investment. More often than not, these businesses are shot down due to a number of reasons ranging from inadequate sales, lack of preparation, or even blatant incompetence, however there are many examples of successful Shark Tank pitches and understanding why that is can be extremely beneficial to any entrepreneur who hopes to gain venture capital at some point in their career.
Lumio is a foldable lamp company founded by Max Gunawan. His pitch was so well received by the “sharks” that he had all 5 of them fighting for a deal with his company. Max was able to gain interest from the sharks by showing his commitment to the product and by backing it up with actual sales numbers. Max showed his commitment level by spending four months living in a Chinese factory to make sure his product was being designed in accordance with his vision. He was also able to grow his company to $1 million in annual sales within two years.
Scrub Daddy is a scratch-free, tough hygienic sponge product designed and developed by Aaron Krause. Aaron had several interested sharks in his product due to his perfect sales pitch. Aaron had spent months refining and practicing his pitch while trying to sell his product in local grocery stores and that practice paid off! By the time he presented his product to the Sharks, he had his pitch so finely tuned and was brimming with confidence that the Sharks went for it.
Beatbox beverages is a boxed fruit wine company founded by Brad Schultz, Aimy Steadman, and Justin Fenchel. Beatbox beverages already had sales in their native state of Texas and Mark Cuban saw potential in the product for expansion. Mark was interested in purchasing a third of the company which the founders of Beatbox were not prepared to give up, however a quick counter offer from Beatbox for nearly double Mark’s offer ended up closing the deal. Beatbox had the confidence and didn’t hesitate with their counter offer which is ultimately what got the deal done. Any hesitation during a price negotiation shows a lack of belief in your company’s true valuation and could effectively kill the deal.
Ultimately there can be an infinite amount of reasons why a deal may or may not close on a show like Shark Tank, but when looking at the deals that were successful, commonalities can be seen amongst them. Most of the deals that closed had existing sales already, confident founders and clean well-rehearsed sales pitches. These traits repeat themselves time and time again within the closed deals on Shark Tank and serve as a good foundation for anyone looking to pitch their business to investors for capital.