I bet most people don't even read the whole contract.
"I further understand and acknowledge that I will be required to enter into further agreements with Finnmax
LLC (“Producer”) relating to the business that I may present to the sharks for possible investment (my “Business”).
Among other things, those agreements are currently anticipated to provide that as a condition of my participation on
the Series, Producer, Sony Pictures Television Inc. and American Broadcasting Companies, Inc. (collectively the
“Shark Tank Entities”) or their designee(s) will receive an irrevocable option (the “Option), to do either of the
following or neither, at their election and in their sole discretion:
1. Receive a 2% royalty of the operating profits of my Business or
2. Receive warrants that give the Shark Tank Entities or their designees a 5% equity interest in my Business. "
Full PDF. http://a.abc.com/media/primetime/sha...pplication.pdf
I bet most people don't even read the whole contract.
When I was thinking about applying I saw the 2% and thought WOW that is HORRIBLE!
But thinking about it more if you appeared on there and your profits only went up 3% seems it would be worth it.
I think even if you didn't get a deal, in most cases your profits would go up quite a bit more than that as long as you have a good product/business.
I agree with PatrickP, what would 8-10 minutes of product exposure on national TV cost? Combine that with a show that has so much discussion online after it plays. That is a free infomercial, which the sharks usually say costs $50k to produce and that hasn't got you any air time.
I agree. If you can have Mark Cuban take your company from a 1 million dollar company to a 10 million dollar company, I don't think you would be complaining about the 2%. Plus it is like an infomercial. Almost every week they show people who didn't walk away with deals from the sharks and now their business's are booming just from the publicity. I've thought about trying to get on the show, not because I want a deal, but because I want the publicity.
I almost like that part the best when they show a company that all the sharks turned down is now doing great.
Or like last week when the woman with the towel with the hole in in is now in Disney World and Mr Wonderful thought it was a horrible product.
For me it shows that no matter how successful you are your opinion is still just that. One person's opinion doesn't mean it is anything close to being correct.
1. Those who are doing very well as this is what keeps the sharks interested.
2. Those with wacko owners who pretty much make fools of themselves.
3. People with a tear jerking story even if they are not making money.
You send in a video of yourself and they let you know. It can be months and months and months before you get on the show so I would imagine for some companies things are completely different than when they applied.
It's not a controlling interest, so who's to say the entity needs to remain the same when it comes to brand, IP, if the perpetual 5% becomes a drag...
I think it's good promotion for your venture provided that you are not one of those "mad scientist" types that are allowed on just for the entertainment value and no one takes them seriously (and even then...).
They do what they do because everyone else, they see, is doing it too. The American hunting tribes, for example, whose organization so puzzled our observers, never formed a State, for there is no way to reduce a hunter to economic dependence and make him hunt for you.
If they get 2% or 5% and I get to keep making A LOT of money that is fine with me. That is how the sharks keep getting richer, if you want that deal, you have to become one of them.
Aside from publicity, I have always wondered WHY anyone would go on the show and give up anywhere from 25% - 75% of their company. Some do, some don't. I guess it all depends on how strongly they believe in their idea. Like the guy with the truck rack who refused to go to a manufacturer in China and would only do it if it were made completely in America. He stood his ground even though they all thought he was fool but eventually an American manufacturer called him to produce his product.
Publicity is the big key I see here though.
Well as the saying goes do you want the whole grape or a slice of a watermelon.
Get 100% of 100K a year of 25% of 5 million a year.
WOWZER! What a great idea by ABC!
Dependent upon the valuation of your business, this probably is not a bad idea for most businesses given the marketing potential of the show.
I see no problem at that. If you close a deal the chances of you taking your company to the millions is very good and if you don't close the exposure is huge!
Saw an article estimating the publicity you get from shark tank, in terms of their instant millions of views + re runs + syndicated episodes, +dvd sales + torrents, etc... might approach 1,000,000$.. i would give 2% of my startup for that, and there are literally tens of thousands of company applying to appear on shark tank, i doubt that the participants are not aware of that or they are considering it too high.
I am not so sure how many are applying.
I sent in an email to do it and received an email reply. Few weeks later they called me and they explained how it goes. Then they sent an email with details how to send in a DVD.
I had decided not to go on with the process. Even after I told them that they kept calling and emailing me asking me to send in a DVD saying they thought I would do well on the show. After a while I just stopped answering the phone.
Who knows maybe they were looking to me to be one of the kookie people they can make fun of : )
I'd love to go on the show, if only to be able to network with the Sharks - although the exposure would certainly be welcome. I presume it's only open to US residents though...?
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