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.

3 Min Read

7 Must-have Tips to Keep You Healthy and Fit for the Unpredictable COVID Future

With a lack of certainty surrounding the future, being and feeling healthy may help bring the security that you need during these unpredictable times.

When it comes to your health, there is a direct relationship between nutrition and physical activity that play an enormous part in physical, mental, and social well-being. As COVID-19 continues to impact almost every aspect of our lives, the uncertainty of the future may seem looming. Sometimes improvisation is necessary, and understanding how to stay healthy and fit can significantly help you manage your well-being during these times.

Tip 1: Communicate with your current wellness providers and set a plan

Gyms, group fitness studios, trainers, and professionals can help you to lay out a plan that will either keep you on track through all of the changes and restrictions or help you to get back on the ball so that all of your health objectives are met.

Most facilities and providers are setting plans to provide for their clients and customers to accommodate the unpredictable future. The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C. An enormous amount is on the table for this coming fall and winter; if your gym closes again, what is your plan? If outdoor exercising is not an option due to the weather, what is your plan? Leaving things to chance will significantly increase your chances of falling off of your regimen and will make consistency a big problem.

The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C.

Tip 2: Stay active for both mental and physical health benefits

The rise of stress and anxiety as a result of the uncertainty around COVID-19 has affected everyone in some way. Staying active by exercising helps alleviate stress by releasing chemicals like serotonin and endorphins in your brain. In turn, these released chemicals can help improve your mood and even reduce risk of depression and cognitive decline. Additionally, physical activity can help boost your immune system and provide long term health benefits.

With the new work-from-home norm, it can be easy to bypass how much time you are spending sedentary. Be aware of your sitting time and balance it with activity. Struggling to find ways to stay active? Start simple with activities like going for a walk outside, doing a few reps in exchange for extra Netflix time, or even setting an alarm to move during your workday.

Tip 3: Start slow and strong

If you, like many others during the pandemic shift, have taken some time off of your normal fitness routine, don't push yourself to dive in head first, as this may lead to burnout, injury, and soreness. Plan to start at 50 percent of the volume and intensity of prior workouts when you return to the gym. Inactivity eats away at muscle mass, so rather than focusing on cardio, head to the weights or resistance bands and work on rebuilding your strength.

Be aware of your sitting time and balance it with activity.

Tip 4: If your gym is open, prepare to sanitize

In a study published earlier this year, researchers found drug-resistant bacteria, the flu virus, and other pathogens on about 25 percent of the surfaces they tested in multiple athletic training facilities. Even with heightened gym cleaning procedures in place for many facilities, if you are returning to the gym, ensuring that you disinfect any surfaces before and after using them is key.

When spraying disinfectant, wait a few minutes to kill the germs before wiping down the equipment. Also, don't forget to wash your hands frequently. In an enclosed space where many people are breathing heavier than usual, this can allow for a possible increase in virus droplets, so make sure to wear a mask and practice social distancing. Staying in the know and preparing for new gym policies will make it easy to return to these types of facilities as protocols and mutual respect can be agreed upon.

Tip 5: Have a good routine that extends outside of just your fitness

From work to working out, many routines have faltered during the COVID pandemic. If getting back into the routine seems daunting, investing in a new exercise machine, trainer, or small gadget can help to motivate you. Whether it's a larger investment such as a Peloton, a smaller device such as a Fitbit, or simply a great trainer, something new and fresh is always a great stimulus and motivator.

Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine.

Just because you are working from home with a computer available 24/7 doesn't mean you have to sacrifice your entire day to work. Setting work hours, just as you would in the office, can help you to stay focused and productive.

A good night's sleep is also integral to obtaining and maintaining a healthy and effective routine. Adults need seven or more hours of sleep per night for their best health and wellbeing, so prioritizing your sleep schedule can drastically improve your day and is an important factor to staying healthy. Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine. This can help the rest of your day feel normal while the uncertainty of working from home continues.

Tip 6: Focus on food and nutrition

In addition to having a well-rounded daily routine, eating at scheduled times throughout the day can help decrease poor food choices and unhealthy cravings. Understanding the nutrients that your body needs to stay healthy can help you stay more alert, but they do vary from person to person. If you are unsure of your suggested nutritional intake, check out a nutrition calculator.

If you are someone that prefers smaller meals and more snacks throughout the day, make sure you have plenty of healthy options, like fruits, vegetables and lean proteins available (an apple a day keeps the hospital away). While you may spend most of your time from home, meal prepping and planning can make your day flow easier without having to take a break to make an entire meal in the middle of your work day. Most importantly, stay hydrated by drinking plenty of water.

Tip 7: Don't forget about your mental health

While focusing on daily habits and routines to improve your physical health is important, it is also a great time to turn inward and check in with yourself. Perhaps your anxiety has increased and it's impacting your work or day-to-day life. Determining the cause and taking proactive steps toward mitigating these occurrences are important.

For example, with the increase in handwashing, this can also be a great time to practice mini meditation sessions by focusing on taking deep breaths. This can reduce anxiety and even lower your blood pressure. Keeping a journal and writing out your daily thoughts or worries can also help manage stress during unpredictable times, too.

While the future of COVI9-19 and our lives may be unpredictable, you can manage your personal uncertainties by focusing on improving the lifestyle factors you can control—from staying active to having a routine and focusing on your mental health—to make sure that you emerge from this pandemic as your same old self or maybe even better.