Pitch Perfect: Analysing US Shark Tank Entrepreneur Pitches, Part 1
Pitching for investment is complex.
I’m a big fan of a British TV show called Dragon’s Den. It’s entrepreneurs pitching to investors. It started in 2005, the same year my first startup Vizero came 2nd at the Imperial College Entrepreneurship Challenge. It’s a fun watch and a lesson on how entrepreneurs present business ideas. Of Course the episodes are heavily edited for brevity and entertainment but we can still glean insights.
It started 2001 in Japan, followed by the UK, and grew to 40 markets. I'll share my 6 favorite startup pitches from Shark Tank US and my analysis. But first - the sharks!
Mark Cuban (MC)
Pittsburgh born Mark is the owner of the Dallas Mavericks basketball team. He is the wealthiest shark with a net worth of $5.4BN. He built his success from computer software and online businesses selling cable TV, medicine, and entertainment but has since branched. He invests with his head and his heart seen when he speaks about his children.
Lori Greiner (LG)
Lori from Chicago is an inventor and business woman with over 100 patents from the plastic erring organizer that paid for her college loans to products in electronics, travel, and home. She is valued for her product knowledege and QVC expertise.
Barbara Corcoran (BC)
Barbara had worked 20 jobs by the time she was 23. She built her wealth in real estate selling her firm for $66MM in 2001. She's a prolific investor with 80 deals on the show according to her website. We can all learn about entrepreneurial drive from her reaction to being rejected from the show before it aired.
Robert Herjavec (RH)
Robert was born in Croatia and immigrated to Canada with his family. He had a tough upbringing due to poverty and language difficulties. It imprinted a toughness on him to never complain. Working through the ranks of software companies he joined he was promoted to leardership roles and built his wealth through their sales.
Daymond John (DJ)
Daymond hails from New York and started a clothing company, FUBU, in his house supported by his mother who taught him to sew. Making T-shirts and hats at night and at Red Lobster restaurant during the day his brilliance shines in marketing where he lent clothing to rappers featured in music videos giving his brand a boost. Since its inception it's made over $6BN in sales.
Kevin O'Leary (KL)
Kevin is a Canadian businessman also known as Mr Wonderful. He founded Softkey, a software company, becoming a major player during the 90s through hostile takeover bids and eventually acquired by Mattel making him a multimillionaire. He invests through his fund setup in 2008 together with his brother Shane. He's the strongest advocate for royalty payments on the show.
These sharks appear in almost every episode. Some only appear periodically like Nirav Tolia (NT) who built consumer internet companies like Yahoo and Nextdoor, the worlds largest local social network, and Daniel Lubetzky (DL) active in food, as the founder KIND snacks, and civic movement, such as OneVoice.
Here's an overview of the 6 shark tank pitches with their initial offer and accepted bid for those which were successful. Let's get pitching!
Shark Tank Startup Pitches
Breathomether: Season 5 Episode 2
Serial entrepreneur Charles Yim pitches a portable breathalyzer that connects with a smartphone and measures blood alcohol content (BAC).
Breathometer lessons
Charles does a great job showcasing his solution to a well established problem, his credibility, and a strong market response.
Offers champagne at the beginning of his pitch
Presents a scenario that everyone can relate to
Demonstrates an easy to use his solution to a real problem
Proves demand with $140k Indiegogo campaign
Expands on functionality in response to a shark's question
Builds credibility with previous exit and raising $0.5MM from angels
The main lessons come from the eager shark investors.
MC highlights his sensor expertise with his Motionloft ownership
MC says other sharks are 'dumb money' and want to go alone
MC offers $500,000 for 20%
DJ explains that it's hard to work with the other sharks
DJ offers $250,000 with unlimited manufacturing for 10%
KL offers $250,000 for 15%, then 3 others join for $750,000 for 30%
KL proposes 5-way split for $1MM round, MC majority, and sharks need a 'really good offer'
Final deal is $1MM from 5 sharks with $500,000 from MC and rest split evenly among the other 4
Given the eagerness of the sharks and comments made privately during the call there was likely room for a better deal for Charles. It is rare that the sharks collude. It is also rare that MC makes an early offer.
Breathometer epilogue
In spite of the pitch securing $1MM in investment and venture generating sales of $5.1MM it failed after a series of controversys leading to a charge by the Federal Trade Commission (FTC), founder mismanagement of funds, and poor execution.
“I’d look at his Instagram and he’d be in Bora Bora ... Two weeks later, he’d been in Vegas partying, and then on Necker Island with Richard Branson. I’d text him, like ‘What the f--- are you doing? You’re supposed to be working, Yim would reply that he was “networking” on behalf of the business. The excuses didn’t quite hold up: Next thing you know, all of the money’s gone.”
Mark Cuban on his Breathometer Investment
In the second part we’ll deep dive into the other 5 pitches. If you can’t wait check out the original post here.
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