Shark’s Tank is the United States version of a reality television show that features a panel of venture capitalists offering to invest in business ideas brought forward by entrepreneurs.

Dragon’s Den: Shark Tank’s Canadian Counterpart (Source: TheStar)

Many young people draw inspiration from this show that appears to offer any innovative person the chance to gain financing quickly by offering up high stakes in their companies. What happens behind the scenes may be more relevant to the young entreprenuers among us who wish to recognize some realistic expectations.

There is a possibility that this programme may negatively impact those that attempt to base their business decisions on actions portrayed in the show. This article suggests that the main problems are that:

• the pitch is overvalued – emphasis is placed on the ability to make a slick pitch as a means to receive funding rather than really understanding the business and the entrepreneur
• decisions are “made” in a short timeline – when the panel agrees to fund they are actually pursuing their interest to learn more and create an investor relationship, not writing a cheque
• ideas are vauled over entrepreneurial ability – creative ideas over effective value propositions (the horror!)
• investors lack industry-specific expertise – investors should be key partners that have insight to offer
• unmeaningful valuations – many give up the majority of the business for funds to continue instead of to add value
• focus on consumer goods – revolves around products that the viewer may enjoy although these would generally employ crowdfunding instead of venture capitalists
• public exposure – those who are denied an investment must continue with a negative light

These pose as problems for both young entrepreneurs and investors so I would suggest to not take this show at face value (although similar presentation skills would still apply).