Shark Tank Explained
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Shark Tank Explained

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Shark Tank Explained

Shark Tank - the place where entrepreneurs go to seek for a loan from an investor in exchange for a certain equity percentage of their company.

I will explain a typical episode of Shark Tank. So you have entrepreneurs coming in with these great businesses and ideas. They enter a room where these Sharks (investors) are sitting as the audience to listen to what the entrepreneur has to present. It starts off with the business owner giving a presentation that lasts between 2-4 minutes. They mention what loan they want from the investors with a certain percentage of equity they will be willing to give up to the Sharks. They will further elaborate on where the business comes from, why it became a business, what exactly it is and the goals it wishes to meet, and this always comes with a visual presentation (either it be a screen with pictures of their business, the products themselves, pamphlets, etc.). After they’re done speaking the entrepreneur listens to what the Sharks have to say. They will ask them further questions about their company and if they like it they will offer them whatever the entrepreneur offered, or another offer they came up with, and rarely will they offer to buy the entire business.

So who are these Sharks (investors)? You have: Mark Cuban, Daymond John, Lori Greiner, Kevin O’Leary, Barbara Corcoran, Robert Herjavec.

Let me take you through a quick example of an episode. And by the way, each episode has a few entrepreneurs that present, it’s not only one so don’t worry it’s not that boring.

  1. Entrepreneur walks through these huge doors to where the Sharks are sitting down, waiting for the entrepreneur to present.
  2. The business owner begins to talk about their company where they explain the business to them and if possible, give samples of their products. In addition, they ask what they’re seeking for (loan amount and equity percentage they are willing to give to them in exchange for the loan), and ends with an invitation to join them in their business.
    1. “I’m John Smith and I’m seeking $500k in exchange for 15% equity….. My business….”
  3. The Sharks then begin to ask further questions about their business, like how much they have made, what they are seeking for, where they sell it, and further questions about the purpose of their business, etc.
  4. What comes next is the most important part of the episode, which is the offers they will give to these entrepreneurs. This is usually the most stressing part. You don’t know who is going to offer these people something right off the bat. Sometimes the Sharks will offer exactly what the business owner came here with. For example, if John Smith came to seek for $500k in exchange for 15% of their company, a Shark might offer that, or they might offer something else. If a Shark is not interested they will further elaborate on it and say “I’m out.” Then the next Shark is next, they are either in or out.
    1. The whole point is to go through all the Sharks to see if any of them will give these people an offer. Sometimes it ends pretty, but sometimes it ends with the entrepreneur walking away without a deal.
  5. In the end, once the deals have been made, they shake hands, the entrepreneur walks away, and then the next one comes in. Everybody goes through the same thing hoping to get a deal with them.

One can argue that this is just a show about getting a loan from these people, but that’s one thing. The most important thing here is getting a partnership with one of these millionaires/billionaires. Who wouldn’t want to get a partnership with somebody who has tons of connections worldwide? Its’s very intimidating coming out in this show because the Sharks are brutally honest, they honestly will make you mad about yourself but you have to keep your cool. They will praise the hell out of your business or criticize it to the point where you just want to give up on it. But at the end of the day, it’s a great experience going to these people because they have a lot to offer. Not only will you get the money you are seeking for, you will also get an incredible partnership with one of them.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.

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