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Shark Tank Hasn’t Had a Huge Success Yet, and This Is Why

Here’s why unicorns prefer grazing elsewhere.

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BY Quora - 31 May 2016

Why hasn't Shark Tank had a very successful company yet? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.

Answer by Mc Kenna Walsh, reformed VC, active mentor and advisor to both funds and startups, on Quora:

One element I think is worth talking about:

All the products on Shark Tank have to be something that can be demonstrated and understood in approximately 3 minutes by a non-technical audience.

Try to explain what Palantir or Oracle does, or even a company like Pinterest, and have that be fun TV to watch. However, Boombas (socks la the Toms model) everyone instantly understands, and then the verbal jousting can begin. No one has to explain to anyone in middle America that socks are a thing.

This constraint has to lead the deals that are presented to fall almost exclusively on a B2C low-tech consumer goods category. Going through CrunchBase's Unicorn list this morning, there are a few companies who could have fit the Shark Tank mold well (Warby Parker, for example) and a few others who might have done okay (Blue Apron, JustFab). However, the overwhelming majority of companies would not have been a good fit.

So then the question becomes: For those who might have been a fit, why would they not go that route?

Let's keep looking at Warby Parker; they raised their seed money from First Round Capital. Then take Boombas, who raised a seed round from John.

Boombas gave away 17.5% of their company for $200k, giving a valuation of about $1.1 million.

Warby Parker raised $1.5 million on non-public valuation, but it's safe to say its value was north of $6 million.

As a founder, which deal would you rather have? The best of the breed have to ability to not go on Shark Tank, to get better deals with better terms. The Sharks tend to offer more Private Equity deals than traditional Venture Capital deals, which have way more expensive terms for the founder. Which also impacts the ability to raise more capital down the road.

This question originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights. You can follow Quora on Twitter, Facebook, and Google+. More questions:


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