Shark Tank, the popular reality TV show, has been a launching pad for many successful businesses. However, not all deals made on the show have been successful. In this article, we’ll take a closer look at some of the Shark Tank deals that failed to make a splash.
The High Failure Rate of Shark Tank Deals
While Shark Tank has been a huge success, with many businesses thriving after appearing on the show, the failure rate of deals made on the show is surprisingly high. According to a study by Forbes, only about 40% of the deals made on Shark Tank are still in business after three years. This means that a significant number of businesses that appeared on the show have failed to sustain themselves in the long term.
Reasons for Failure
There are many reasons why Shark Tank deals may fail. Some of the most common reasons include:
- Lack of scalability: Many businesses that appear on Shark Tank are small, niche businesses that may not have the potential to scale up to meet the demands of a larger market.
- Poor management: Some businesses may have a great product or service, but poor management can lead to financial mismanagement, poor decision-making, and ultimately, failure.
- Insufficient funding: While the Sharks may invest a significant amount of money in a business, it may not be enough to sustain the business in the long term.
- Increased competition: After appearing on Shark Tank, businesses may face increased competition from other companies that are trying to capitalize on the same trend or idea.
Some Notable Shark Tank Deals That Failed
Here are a few examples of Shark Tank deals that failed to make a splash:
Cousins Maine Lobster
Cousins Maine Lobster was a seafood company that appeared on Shark Tank in 2012. The company’s owners, Jim Tselikis and Sabin Lomac, secured a $55,000 investment from Barbara Corcoran in exchange for 15% equity. However, the company struggled to scale up its operations and eventually filed for bankruptcy in 2018.
Wake ‘n Bacon
Wake ‘n Bacon was a company that made an alarm clock that cooked bacon. The company’s owner, Matty Sallin, secured a $40,000 investment from Kevin Harrington in exchange for 25% equity. However, the company struggled to gain traction and eventually shut down in 2013.
Toygaroo
Toygaroo was a toy rental company that appeared on Shark Tank in 2011. The company’s owner, Nikki Pope, secured a $50,000 investment from Mark Cuban in exchange for 35% equity. However, the company struggled to compete with other toy rental companies and eventually shut down in 2012.
What Can We Learn from Failed Shark Tank Deals?
While it’s easy to focus on the successes of Shark Tank, we can also learn a lot from the deals that failed. Here are a few key takeaways:
- Scalability is key: Many businesses that appear on Shark Tank are small, niche businesses that may not have the potential to scale up to meet the demands of a larger market.
- Management matters: Poor management can lead to financial mismanagement, poor decision-making, and ultimately, failure.
- Funding is not a guarantee of success: While the Sharks may invest a significant amount of money in a business, it’s not a guarantee of success.
Success Stories from Failed Shark Tank Deals
While some Shark Tank deals may have failed, the entrepreneurs behind them have often gone on to find success in other ventures. For example:
- Jim Tselikis and Sabin Lomac, the owners of Cousins Maine Lobster, have gone on to start a new business, a seafood restaurant in Maine.
- Matty Sallin, the owner of Wake ‘n Bacon, has gone on to start a new business, a marketing firm.
Conclusion
While Shark Tank has been a huge success, with many businesses thriving after appearing on the show, the failure rate of deals made on the show is surprisingly high. By looking at some of the deals that failed, we can learn valuable lessons about the importance of scalability, management, and funding. Additionally, we can see that even though some deals may have failed, the entrepreneurs behind them have often gone on to find success in other ventures.
| Company | Shark | Investment | Equity | Outcome |
|---|---|---|---|---|
| Cousins Maine Lobster | Barbara Corcoran | $55,000 | 15% | Filed for bankruptcy in 2018 |
| Wake ‘n Bacon | Kevin Harrington | $40,000 | 25% | Shut down in 2013 |
| Toygaroo | Mark Cuban | $50,000 | 35% | Shut down in 2012 |
Note: The table above is a summary of some of the Shark Tank deals that failed. It is not an exhaustive list.
What is the main reason for the failure of Shark Tank deals?
The main reason for the failure of Shark Tank deals is often attributed to the lack of due diligence and thorough research by the Sharks before investing in a business. Many times, the Sharks get caught up in the excitement of the pitch and the potential for high returns, without fully understanding the business model, market, and financials. This lack of understanding can lead to poor decision-making and ultimately, the failure of the investment.
Additionally, the pressure of the TV show’s format can also contribute to the failure of deals. The Sharks often have to make quick decisions, which can lead to impulsive choices that may not be in the best interest of the business. Furthermore, the Sharks may not always have the necessary expertise or experience in the specific industry, which can make it difficult for them to provide effective guidance and support to the entrepreneurs.
What are some common mistakes made by entrepreneurs on Shark Tank?
One common mistake made by entrepreneurs on Shark Tank is overvaluing their business. Many entrepreneurs come onto the show with unrealistic expectations of their business’s worth, which can be a major turn-off for the Sharks. This can lead to a lack of investment or a deal that is not favorable to the entrepreneur. Another mistake is not being prepared to answer questions about their business, such as financials, marketing strategies, and competition.
Additionally, some entrepreneurs may not have a clear understanding of their business’s unique selling proposition (USP) or competitive advantage. This can make it difficult for them to articulate their value proposition to the Sharks and convince them to invest. Furthermore, some entrepreneurs may not be willing to negotiate or compromise on their valuation or equity stake, which can lead to a failed deal.
Can a failed Shark Tank deal still lead to success for the entrepreneur?
Yes, a failed Shark Tank deal can still lead to success for the entrepreneur. Many entrepreneurs who have appeared on the show have reported an increase in sales and exposure for their business, regardless of whether they secured a deal or not. The publicity and marketing value of appearing on the show can be significant, and many entrepreneurs have been able to leverage this exposure to secure funding or partnerships outside of the show.
Additionally, the experience of pitching on Shark Tank can be a valuable learning experience for entrepreneurs. It can help them refine their pitch, identify areas for improvement, and develop a thicker skin when it comes to rejection. Many entrepreneurs have reported that the experience of pitching on Shark Tank has helped them to secure funding or partnerships in the future, even if they didn’t secure a deal on the show.
What is the most notable failed Shark Tank deal?
One of the most notable failed Shark Tank deals is the deal between Kevin Harrington and the entrepreneur behind the “Wake ‘n Bacon” alarm clock. The entrepreneur, Matty Sallin, secured a deal with Harrington for $40,000 in exchange for 25% equity, but the deal ultimately fell through due to a lack of communication and trust between the two parties.
The deal was notable because it was one of the first times that a Shark Tank deal had fallen through, and it highlighted the importance of due diligence and clear communication in business partnerships. The deal also sparked a heated debate between Harrington and Sallin, with both parties blaming each other for the failure of the deal.
How do the Sharks handle failed investments?
The Sharks handle failed investments in different ways, depending on the individual Shark and the specific circumstances of the deal. Some Sharks, such as Mark Cuban, have been known to be very hands-on and involved in the businesses they invest in, and will often work closely with the entrepreneur to try and turn the business around.
Other Sharks, such as Robert Herjavec, have been known to take a more hands-off approach, and will often rely on the entrepreneur to run the business and make key decisions. In the event of a failed investment, the Sharks will often try to minimize their losses and cut their ties with the business. However, some Sharks have also been known to hold onto failed investments for too long, in the hopes of recouping their losses or turning the business around.
Can failed Shark Tank deals be a learning experience for the Sharks?
Yes, failed Shark Tank deals can be a learning experience for the Sharks. The Sharks are experienced businesspeople and investors, but they are not immune to making mistakes. Failed deals can provide valuable lessons and insights for the Sharks, and can help them to refine their investment strategies and approaches.
For example, a failed deal may teach a Shark to be more cautious when investing in a particular industry or type of business. It may also highlight the importance of due diligence and thorough research before making an investment. Additionally, failed deals can provide an opportunity for the Sharks to reflect on their own decision-making processes and biases, and to identify areas for improvement.
What is the impact of failed Shark Tank deals on the entrepreneurs?
Failed Shark Tank deals can have a significant impact on the entrepreneurs who appear on the show. For some entrepreneurs, a failed deal can be a major setback, and can lead to feelings of disappointment, frustration, and disillusionment. It can also be a significant blow to their confidence and self-esteem.
However, many entrepreneurs have reported that a failed Shark Tank deal has not held them back, and has instead provided a valuable learning experience and opportunity for growth. It can help them to refine their pitch, identify areas for improvement, and develop a thicker skin when it comes to rejection. Additionally, the exposure and publicity from appearing on the show can still be beneficial, even if a deal is not secured.