On Shark Tank, entrepreneurs pitch ideas to a panel of celebrity investors and after 222 episodes, 895 pitches, 499 deals, $143.8m worth of invested capital, and nearly $1B in company valuations, it is time to conduct an appraisal.
Here is a selection of findings:
• 56% of contestants successfully make a deal
• Women are underrepresented on the show and secure smaller deals
• The average deal amount is $286k; the average equity given up is 27%
• Food (20%) and fashion (19%) are the most popular pitch industries
• Mark Cuban is the most prolific deal-maker (151 deals in 10 seasons)
Six out of 10 Shark Tank contestants were men, or all-male teams, while less than twenty five percent were women. According to the US Department of Labor, women own 36% of all American businesses, meaning that female entrepreneurs are under-represented.
More than Fifty five percent of all pitches fell into 3 categories: Food & beverage (20%), Fashion/Beauty (19%), and Lifestyle/Home (16%). In Shark Tank history, 895 teams have made pitches. Of these pitches, 56% (499 of 895) succeeded in landing a deal. Of successful contestants, 57% (284) were men, 27% (133) were women, and 16% (82) were mixed-gender teams. While still poor, this was a great result for women compared to real life investment for entrepreneurs where only 2.2% of all VC dollars go to women. Sixty percent (60%) of women who pitched (133 of 221) got a deal, compared to 53% of men (284 of 535).
Along industry lines, contestants pitching lifestyle/home products fared the best (61% success rate) — though all major categories had at least a 1-in-2 chance of walking away happy. Niche categories had a bit more variance: 75% (9 of 12) of contestants with automotive products got a deal, compared to only 35% (6 of 17) in the business services space. The average deal success rate (56%) has also increased as the years went by. Ten years ago, only 42% got a deal; last season, that figure was up to 68%. This is likely due to higher-quality, more investment-worthy pitches.
The average contestant asks for $301k for 13% of their company and seek a $3.6m valuation. But although the average dollar amount of a deal ($286k) comes quite close to the ask, contestants sacrifice more than double the stake in their companies and their projected valuation nearly cut in half. Female contestants ask for, and receive, much smaller deals than male contestants ($214k vs. $324k). They also sacrifice more equity (30% vs. 26%) and walk away with 23% smaller valuations.
Of the 22 $1m+ deals, only two — less than 1% — went to female, or all-female teams. More than 7 in 10 (and 80% of the top 10) went to men.
Billionaire Mark Cuban tops out on deals made (151) and total dollar amount invested ($33.6m). Combined, Lori Greiner, (Queen of QVC) and Cuban account for 54% of all Shark Tank deals. Investments closely align with the investors’ backgrounds: Daymond John (FUBU) has a vested interest in fashion, Lori Greiner (the “Queen of QVC”) sticks to quick-selling home goods, and Kevin O’Leary (an ex-software guy) invests in software. Shark Tank’s two female hosts, Corcoran and Greiner, have the most balanced investment records. The men all fall below the average.
My complaint is that the reality of raising funds in the real world is vastly different
than that of the TV world.
We are seeking increased funding for Alzheimer’s research!
When do we want it?
When do we want what?