How old was the company again?
I love my shark tank, but this one just threw me through a loop.
Why in the world are these guys throwing money at this musical guy?
Google ventures throws in 100k, Timberlake, Michaelson, and others have
tossed money at this dude over and over - valuing the company at 6 mil
with only 40,000 in sales!?
I could understand the possibilities of a program like this but at the same
time it seems unlike the sharks to bite hook, line, and sinker.
Cuban ends up throwing 300k his way for 8% of the company. The company
would have to do, what? 4 million in profit for him to just get his return back?
Maybe a little less but man... what is this guy doing with all this money he
is getting??? Somebody educate me here?
How old was the company again?
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He didn't really say but he had basically gone through the first round of investments within the previous 6 months.
It's really less about the money invested it more about the structure that the guy had in place.
He had the names, the musicians, the product produced and positioned.
Mark C. mainly invested because his going to take a Venture Capital buyout probably within 6 months after presenting it to more investors.
I don't understand it that well because I'm more a Mom and Pop business guy. I wonder what I could get for an investment in my company with profit of $800,000 this year?
I wouldn't take the money but I've always wondered.
I had the same question as you too. I felt that a $3.75 million post-money valuation (hope I used the term correctly) was too high. But then in reality, a lot of the deals they show on TV don't go through or the terms get changed. For example, there was an episode where two guys got an investment from Kevin for their tea company. But after it was filmed, the Sharks teamed up and they sold the company to Jamba Juice.
Check out this blog post by VC Mark Suster titled "Should Startups Focus on Profitability or Not?" It should help answer your question. He talks about the trade-off between profits & growth. "You can drive profits up by not investing today’s dollars in tomorrow’s growth."
Will misomedia be able to sell $4 million in sheet music from their app is another question...
I'm going through valuation of one of my businesses at the moment. Ideally 1.4, but I have the sales to back it up - there's no way I could ask triple that with 40k in sales... hell that's only a month's gross....!
I think my next business I'm just going to create some sort of technology nobody understands and make millions.
To me, and I might be wrong, the app industry of today reminds me of the dot com industry of the late 90s. People seem to just throw money at it because it's "new" and "growing" but it's hard to tell whether there is anything substantial there. I think that there will be an oversaturation of the app market and that there will be something resembling the dot com bust, only on a smaller scale.
I like all the new tech innovations that are coming out every year, but whether all of it is sustainable remains to be seen. Eventually companies like Instagram and Foursquare will have to figure out ways to be monetize, be bought out, or shut down.
I can see the valuation.
They do decide to sell the app for $0.99 and bring in $80k a month. I think there is a pretty broad appeal that type of app. If you look at the video game Rocksmith, it's very similar in that you play a real guitar and learn the instrument as you play the game.
The app removes the need for an Xbox and TV, all you need is your guitar, a connector and an Ipad or tablet and you can practice and learn anywhere.
You couple that will the ability to download new music as it comes out and the potential income per customer is pretty huge and consistent.
I could see it being a multi-million dollar business.
No you can't see the valuation by any standardized valuation model.
For $600K I could build a better app/company.
The sharks must have had additional information not presented on TV or they are degenerate gamblers.
Over 50% of the price must be the quality of the entrepreneur and his pitch...that's crazy.
If the founders died, the business would be valued at under $600K.
I would bet money against Mark Cuban getting a return.
I've always wondered who would buy a business for 3x earnings and wait 3 years to get back their money. Unless the business was making $800k and would be truly passive to the investor I just don't see an investor doing it. Now someone who doesn't understand and is buying a job would probably think that it's a great deal.
I went to a lecture with Damond John and he told us that on shark tank he will do about 10 deals a yr on the show but in reality he will only team up with 2-3 of the 10 becuase after further investigation of the business he said yes to things did not pan out. He also said that what we see on tv takes about 8 min but it really can take between 45 - 1 hr for each business. The sharks know nothing about the companies that are pitching to them before hand and there is no script.
Is it because of Ingrid and Timberlake? Are they going to be the spokespeople for this?
Mark Burnett receives 2% of profits for the rest of time for every business that appears on the show.
Even if they do not make a deal. That is easily millions a year for the rest of his life.
Sounds like a great deal for mark Burnett!
The 6th Shark?
Caroline , I THINK her name was told me it was a competition between her and the other woman who could get more of their people accepted. She said they like to have people with legit businesses which are already making money and they like to sprinkle in some wacky businesses which the owner is a little nutty to make the show intersting.
So she said I had to do a video and sign some papers. She emailed over the papers and walla there it was 2% to Mark Burnett.
I didn't even up sending in the video. Actually I wanted to partner with one of the sharks more than I needed the money. I am not a confident speaker so I probably would have crumbled and looked like a fool anyways.
Another thing Caroline told me is when you walk into the shark tank you are not allowed to talk to the sharks and they do not talk to you for 5 minutes. So you stand there petrified and waiting and then they pounce on you lol
You can also Google it and see for yourself.
A Very Special Episode: TV Takes On Patent Trolls | TechCrunch
Most important, Mark Burnett Productions, takes a percentage of each company, whether it receives funding or not, so it’s sort of a nice investment engine for ABC. The entrepreneurs get fifteen minutes in the spotlight, offering pitches that are one step up from a first-year MBA presentation, then the sharks get to tear into them. In the end, nobody goes home happy except maybe Mark Burnett.
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