I'm a fan of Shark Tank, a new show on ABC, Friday nights. In this show, five professionals who have tons of money - either they made it on their own, or they inherited it or both - invite startups to pitch them for investment capital. You get about 15 minutes - 5 minutes to make your case and about 10 minutes to negotiate if they engage you. If any one of them isn't interested, he or she (there is one woman on the panel... just one) will say, "I'm out." And, they always tell you why they're out - it's just not for them, they don't believe it's viable, whatever.
There are a number of annoying things about Shark Tank that often have me shaking my fist at the TV. "You idiots!" I shout. "How can you be so stupid?" I yell at the people pitching almost as often as I yell at the Sharks, themselves. Sometimes, I wonder how the producers let the pitchers in... when they're woefully unprepared to show the value their company has or is bringing, even I have to say, "I'm out."
The great things about this show outweigh the not so great, however. I've come to respect most of the Sharks. I don't always agree with them, and I often think they're passing up good deals, or accepting foolish ones. But, what do I know?
Here's why this is a must-see for anyone in business, regardless of whether you're looking for investment funding or not. The experience, vicarious though it is, is very valuable. By watching someone pitch a new tech gadget, or a better mousetrap, you learn what works and what doesn't. By listening to the questions the possible investors ask each person, you learn what investors need to hear and what they want most. By watching the body language everyone reveals, whether aware of it or not, you learn a lot. Mark Cuban is especially easy to read.
1. It's not about you. It's about the money. How much have you made to date and how much can you make for your investors?
2. It's definitely about you. The more enthusiasm you have, the more they like it. However, enthusiasm plays a small 'second' to how much money you have now, how much you've invested and how much you will make for them.
3. If you're serious about securing investments, you need to perfect your pitch. You need to have a clear sense of how business is created and how to make a profit. Don't go in with just a great idea, even if you've created a website for it.
4. "I think" is not a qualifying reason for anyone to invest in your idea. Instead, "The market for this is Xmillions and the only competition is here and here, and my product/service is better because..."
5. Holding out for more money is not a good idea if the offer being made will get you where you need to be. If you've come to the table asking for $150K for 20% of your business and the Shark offers you $100K for 25%, you need to calculate the value of that in an instant, and make a decision. Don't dicker over pennies.
All in all, the Shark Tank investors have taught me the value of knowing my business before taking it to an investor. If I can't show my profit-making venture in the first 5 minutes (5 minutes, btw, is a long time to talk), then I need to hold off until I can.
That said... the folks in the Shark Tank, sitting smugly in their chairs and joking about the folks who come before them, don't know everything. They've turned down two viable pet businesses - because they still think pets are just creatures you feed and walk once in awhile. They are completely ignorant of the fact that pets are a $55 billion dollar business and that pet people do, indeed, buy things like... birthday cakes, for their dogs and cats.
Think your idea deserves funding? Check out the information on how to get on the show, here.
With that, I'm out.