Who would not love an opportunity to pitch their business in front of billionaires. If you do get an opportunity to do so which will be a once in a lifetime opportunity, you want to make sure you do it right. I am a longtime fan of Shark Tank. I have seen people on the show pitching their products and not too long afterwards I am seeing their products in my local stores. From watching the show I have noticed some key characteristics between those who get funded and those who do not. Here are 23 tips that I have seen from the show.

  1. Business is too niche. Investors believe if your market size is too small, you will not have enough customers to buy your product/service.
  2. Too high valuation. Do not fluff your numbers.
  3. Not enough sells. Without sells it is difficult to prove there is a market for your company. Check out the video below to see how the company, Sweepeasy, got a deal with two sharks without any sells. Scoring a deal with one shark is almost impossible with no sells, but Sweepeasy managed to get a deal with two sharks. You definitely want to take some good notes from this one.
  1. Product or service is based on trends. If your product is based on current trends, an investor may think over time your sells will decrease due to changing trends. You want to make sure you create a product/service that will be around for a while. I remember one company on the show who had a lot of sells due to their product going viral on Tik Tok. However, none of the sharks were impressed, and the owners were shocked. The sharks replied to the owners that they think their sales are based on a temporary trend which will eventually die out. As a result, the sharks did not invest.
  2. Product is not good. You will think this is an obvious one. You need to make sure what you created actually works. *cough* Theranos
  3. Being split between your business and another career. If you are not 100% committed to your business neither will an investor. Sharing your story about why you started your company can show you are committed even though you have another job.
  4. High amount of debt in the company. Having a lot of debt in your company is a turn off to investors as their money will more likely have to go towards paying down the debt.
  5. Cannot scale the company. Investors want to invest in companies that have potential to grow and expand.
  6. No clear way for the investor to make a return on their investment. Lacking a clear way for an investor to make money is a sure fire way of receiving a “no.” During your pitch be sure to let the investor know how they will make money.
  7. Making unproven claims about your product. A popular claim made on Shark Tank is claiming their product will make you lose weight. Every time, the sharks reply where is your proof. If you make claims about your product be sure to include proof.
  8. Owner does not listen to corrective criticism. It can be difficult to hear someone criticize your precious idea or product. It is like hearing someone talk bad about your child. However, do not take offense. When you can take corrective criticism, it shows investors you are a good listener and someone who is easy to work with. What they say may be helpful in growing your business.
  9. The profit margin is too low. If the cost to make your product or provide your services is too high, this can be a turn off for investors.
  10. A sudden drop in sales or steady decline in sales. If this is your situation, be sure to have an answer for the reason for the decrease in sales.
  11. Too much competition. If there are too many other companies already providing what you provide, an investor is not likely to invest. Your share of the market will be seen as small. Investors like to invest in unique and inventive companies. In the video below you will see how the company Baobab struggled to communicate how their company will stand out in a competitive market. The sharks gave feedback that you may find helpful for your company.
  1. Go to market strategy is too expensive. Make sure you keep your costs down. If you have a product based business make sure your product is easy to understand so you do not have to spend a lot of money educating clients on using your product.
  2. Not solving a real problem. Whatever your product or service is, it needs to solve a real problem your customer has. Your customers have to see this problem as big enough problem to spend money to solve it.
  3. Investors are not interested in your industry. You may be pitching the next greatest invention, but if the investor is not interested in being a part of your industry they will not invest. It is in your best interest to choose investors who are interested in investing in companies in your industry. Here is a clip from Shark Tank from the company Frozen Farmer. See how this entrepreneur was able to secure a deal even though the sharks were not interested in getting involved in the food industry.
  1. Saying if I get X% of the market I will make X. People will say this is a billion dollar industry and if I just get 10 % of the market, my company will make 100 million dollars. This is probably the most irritating statement to the sharks on Shark Tank.
  2. Owner is indecisive. If you watch the show regularly, I am sure you have seen a shark go out due to the owner taking too long to make a decision to accept their deal. Investors want to work with confident people who are sure of what they want.
  3. The investor is working with your competitor. If the investor has already invested in another company providing similar services/products, they are not likely to invest due to conflict of interest.
  4. Focused on too many products/services. It is great to have multiple ideas of how you want to expand your product line or service, but it can paint a negative picture that you are not focused. It is best to be focused on one main product or service at a time. Once that product/service is doing well then expand.
  5. Barrier to entry is small. Whenever a company comes on Shark Tank with a small barrier to entry, I can just hear Kevin aka. Mr. Wonderful saying, “What will keep them from stomping you like the cockroaches you are.” If you have nothing propriety about your idea then your competitors can easily steal your idea and beat you to market. Patenting your product is a great way to prevent this.

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