Rather be a Shark or an Angel?

Amused that ABC thought there was any entertainment value in showing the entrepreneur-investor fund-raising process (yawn!), I checked out the first few episodes of Shark Tank. Actually, it’s pretty entertaining, and my kids and I are now sitting in front of the tube yelling “Take the offer you idiot!” or “Walk away – they’re greedy bastards!” or “What the heck were you thinking?”

Shark Tank’s five investors – themselves successful entrepreneurs – see pitches from hopeful and sometimes desperate entrepreneurs. Thanks to Mark Burnett (Survivor, Apprentice, Contender, etc), I now know what it’s like to have your profession turned into a reality show. It’s very stylized and quick-to-judge and loud. Most of the time, investors accept no less than 50% of the company. That’s pretty harsh by typical Angel terms.

I’m not sure if a show like this sets back the Angel trend or enhances it. The reality (at least here in L.A.) is not nearly as sexy as it is on TV. Angels are more cooperative with entrepreneurs rather than confrontational. Deals are never evaluated nor negotiated so quickly between commercial breaks. There is always a ton of due diligence required from both sides to become comfortable with each other. All that is ignored in the show.

I would love to see some audience interaction – like the entrepreneur can poll the audience whether to accept a deal, or the entrepreneur can call a lifeline expert for advice.

One lesson becomes painfully visible on the show, and it has also become clearer and clearer to me during my career:  The hardest decision an entrepreneur makes is letting others “in” on their company stock, whether they be investors or employees.

Does an entrepreneur give away a big stake in their company in order to increase the chance of success, or do they hold on to everything and risk never making it? In other words, can they accept a smaller piece of a bigger pie or keep a bigger slice of a much smaller pie. There is no right answer – only that investors and entrepreneurs must have shared expectations and a way to part cleanly when those expectations diverge.

But hey, if a show like Shark Tank raises awareness and brings in more deals and better terms for Angels – and these sharks are pretty good at beating down their entrepreneurs – then ultimately I may have to thank Mr. Burnett. But like the guys selling pick-axes and jeans to gold miners, he’ll be too busy laughing all the way to the bank.

Shark Tank on ABC Sundays at 9pm.  Official show website:
http://beta.abc.go.com/shows/shark-tank

Unofficial blog with summaries and commentary about the show:
InTheSharkTank.com

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3 Responses to Rather be a Shark or an Angel?

  1. Withheld says:

    Actually the due diligence happens after the filming, it takes months. Then if O.K. – the segment airs, etc. These segments were filmed months ago, not real time.

  2. Cliff Allen says:

    The show is entertaining for entrepreneurs, but it also might be educational for would-be entrepreneurs.

    Entrepreneurs need to hear a potential investor ask, “How will I get my money back?”

    Unfortunately, the show may give potential entrepreneurs the idea that they can seek investment without having made a prototype or know the manufacturing costs or know the marketing costs.

    But, hey, it’s a TV show.

  3. Greg W says:

    Thank you for the very interesting post. I do not watch regular television, only an occasional movie or two, so I had no idea that this show was being aired.
    Now, I am going to have to tune in for a few episodes and see what it is all about.
    Thank you, again, for sharing this.

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