The 2% Reality of Shark Tank Success: How Your Business Pitch Can Land You An Investment

4min read

It's not every day that a TV show can offer its audience tried and true tips for succeeding in their real-life endeavors. However, that has been one of greatest selling points of the popular reality series Shark Tank which showcases rising entrepreneurs pitching their business concepts to a panel of renowned investors, referred to throughout the show as "sharks." The entrepreneurs who step into the shark tank not only offer up their best business pitches, but must also come prepared to answer more cuthroat questions on their company's services, practices and revenue. While every contestant aspires to get any one shark to bite, thus enabling them to walk away with financing for their company, it is no surprise that convincing more than one shark to invest is far more challenging.

In effort to uncover more about the success of its participants, Frontier Business analyzed data from the Shark Tank website to find out just how successful entrepreneurs of the show have been. According to the data collected, Shark Tank has received pitches from a total of 894 companies over the course of their 10 seasons on air. Of those companies, 499 have been successful in accepting a deal from one or more sharks while only 2% of the total companies have received or accepted investment offers from three or more sharks.

Despite the show serving as entertainment to millions of its viewers, there is no exaggeration in the sharks' unwillingness to invest in just any old company. The renowned self-made tycoons, Robert Herjavec, Kevin O'Leary, Barbara Corcoran, Daymond John, Mark Cuban, and Lori Greiner have their own unique interests and requirements that can make or break an entrepreneur's chances at striking a deal. However, even when a deal may seem too good to pass up on, the sharks have had to face the unfortunate fate of having to witness a company they once had faith in, fail to meet the demands of its respective market. While some of the most successful products and companies to emerge from Shark Tank includes Scrub Daddy, Wicked Good Cupcakes and Simple Sugars, to name a few, other companies such as Classroom Jams were unable to find success following their debut on the show.

For the companies that have managed the reap the benefits of having a shark invest in their business, the price for this success has always been heavily dependent upon the amount of equity entrepreneurs were willing to hand over. "On average, companies that made a deal with the sharks gave up 26.84% equity in their company. Those with three or more shark deals gave up 34.82% equity," according to Frontier. In order for the sharks to offer more funding, entrepreneurs are expected to hand over a greater percentage of stake in exchange. However, securing more funding from the sharks does not determine the inevitable success or failure of the company overall.

Even when a business looks great on paper, it is simply not enough to ensure that there is room in the market for the business to stay afloat, much less flourish. One of the most crucial selling points for sharks is the valuation of the company being presented. Entrepreneurs can claim their company to be worth over $10 million, but if the true value is estimated to be far less, in the eyes of the investors, then chances are entrepreneurs will not be walking away with their desired amount of funding. Because valuation determines equity, lowering the valuation of a company means equity becomes cheaper, as well. This my advantageous for sharks, but ultimately puts entrepreneurs at a disadvantage by restricting how much money entrepreneurs can request.

So, how have the 2% of successful companies managed to overcome these odds? They have all successfully showcased their company's ability to earn profits while proving to the sharks that there exists a significant demand for their product/service in its respective market. According to Frontier, the two most popular categories of companies who have received three or more offers have been the fashion/beauty and food/beverage categories. While it may seem as though there is only so much room for originality within these categories especially when it feels as though everything that could exist probably already does, these entrepreneurs have managed to successfully demonstrated their originality while proving there are still game changing ideas left to explore.

Earlier this month, O'Leary and shark tank contestant Sarah Paiji Yoo, sat down with Kitco New's Editor-in-Chief to discuss the key factors in a pitch that can help future entrepreneurs win on Shark Tank. The Co-founder and CEO of Blueland, a household cleaning supply company with a mission of reducing plastic pollution, first appeared on the show's Season 11 premiere episode. Their innovative dissolvable cleaning products quickly struck the interest of the sharks. O'Leary jumped at the opportunity to invest by requesting 10% equity in the company, but ultimately ended up accepting Yoo's counteroffer of 3% equity with $.50 royalty on each Clean Essentials Kit. Not only was O'Leary admittedly impressed by the product itself, but stated that Yoo's success on the show stemmed from her ability to demonstrate the products effectiveness alongside its history of financial success.

"I love products that are disruptive because they're going to get a lot of attention. I love products that you can see and within four seconds understand why they should exist. "I love entrepreneurs that have a track record of success, and as you know over the last eleven years, the majority of returns have come from companies run by women," said O'Leary.

Although each shark may be persuaded to invest in a company for a variety of personal or professional reasons pertaining to their own experience with companies maintaining success after the show, it goes without saying that a well demonstrated product backed by a well-rounded business pitch will increase the chances of entrepreneurs getting more than one shark to put an offer down for their startup. Despite Yoo being offered funding from leading investors, her understanding of the market and the valuation of her company and products is what ultimately sold O'Leary on taking a chance on her.

While Shark Tank has not only changed the lives of its participants by giving them an opportunity to scale their businesses, the show offers aspiring entrepreneurs the chance to refine their own business pitches based on the mistakes and successes of others. Receiving an investment from three or more sharks may be staggeringly low, at a mere 2%, but the data compiled from Frontier opens the doors for entrepreneurs to successfully pitch to investors and receive funding or maybe even try their luck at winning Shark Tank themselves.

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How This CEO Is Using Your Period To Prevent Chronic Diseases

With so many groundbreaking medical advances being revealed to the world every single day, you would imagine there would be some advancement on the plethora of many female-prevalent diseases (think female cancers, Alzheimer's, depression, heart conditions etc.) that women are fighting every single day.

For Anna Villarreal and her team, there frankly wasn't enough being done. In turn, she developed a method that diagnoses these diseases earlier than traditional methods, using a pretty untraditional method in itself: through your menstrual blood.

Getting from point A to point B wasn't so easy though. Villarreal was battling a disease herself and through that experience. “I wondered if there was a way to test menstrual blood for female specific diseases," she says. "Perhaps my situation could have been prevented or at least better managed. This led me to begin researching menstrual blood as a diagnostic source. For reasons the scientific and medical community do not fully understand, certain diseases impact women differently than men. The research shows that clinical trials have a disproportionate focus on male research subjects despite clear evidence that many diseases impact more women than men."

There's also no denying that gap in women's healthcare in clinical research involving female subjects - which is exactly what inspired Villarreal to launch her company, LifeStory Health. She says that, “with my personal experience everything was brought full circle."

“There is a challenge and a need in the medical community for more sex-specific research. I believe the omission of females as research subjects is putting women's health at risk and we need to fuel a conversation that will improve women's healthcare.,"

-Anna Villarreal

Her brand new biotech company is committed to changing the women's healthcare market through technology, innovation and vocalization and through extensive research and testing. She is working to develop the first ever, non-invasive, menstrual blood diagnostic and has partnered with a top Boston-area University on research and has won awards from The International Society for Pharmaceutical Engineering and Northeastern University's RISE.

How does it work exactly? Proteins are discovered in menstrual blood that can quickly and easily detect, manage and track diseases in women, resulting in diseases that can be earlier detected, treated and even prevented in the first place. The menstrual blood is easy to collect and since it's a relatively unexplored diagnostic it's honestly a really revolutionary concept, too.

So far, the reactions of this innovative research has been nothing but excitement. “The reactions have been incredibly positive." she shares with SWAAY. “Currently, menstrual blood is discarded as bio waste, but it could carry the potential for new breakthroughs in diagnosis. When I educate women on the lack of female subjects used in research and clinical trials, they are surprised and very excited at the prospect that LifeStory Health may provide a solution and the key to early detection."

To give a doctor's input, and a little bit more of an explanation as to why this really works, Dr. Pat Salber, MD, and Founder of The Doctor Weighs In comments: “researchers have been studying stem cells derived from menstrual blood for more than a decade. Stem cells are cells that have the capability of differentiating into different types of tissues. There are two major types of stem cells, embryonic and adult. Adult stem cells have a more limited differentiation potential, but avoid the ethical issues that have surrounded research with embryonic stem cells. Stem cells from menstrual blood are adult stem cells."

These stem cells are so important when it comes to new findings. “Stem cells serve as the backbone of research in the field of regenerative medicine – the focus which is to grow tissues, such as skin, to repair burn and other types of serious skin wounds.

A certain type of stem cell, known as mesenchymal stem cells (MenSCs) derived from menstrual blood has been found to both grow well in the lab and have the capability to differentiate in various cell types, including skin. In addition to being used to grow tissues, their properties can be studied that will elucidate many different aspects of cell function," Dr. Salber explains.

To show the outpour of support for her efforts and this major girl power research, Villarreal remarks, “women are volunteering their samples happily report the arrival of their periods by giving samples to our lab announcing “de-identified sample number XXX arrived today!" It's a far cry from the stereotype of when “it's that time of the month."

How are these collections being done? “Although it might sound odd to collect menstrual blood, plastic cups have been developed to use in the collection process. This is similar to menstrual products, called menstrual cups, that have been on the market for many years," Dr. Salber says.

Equally shocking and innovative, this might be something that becomes more common practice in the future. And according to Dr. Salber, women may be able to not only use the menstrual blood for early detection, but be able to store the stem cells from it to help treat future diseases. “Companies are working to commercialize the use of menstrual blood stem cells. One company, for example, is offering a patented service to store menstrual blood stem cells for use in tissue generation if the need arises."