Over six seasons each of “Shark Tank” and its Canadian predecessor “Dragon’s Den,” Robert Herjavec has seen thousands of pitches.
Each “Shark Tank” segment lasts about 10 minutes, but the footage is edited from typically an hour-long presentation by an entrepreneur or team of them trying to sell a piece of their company for capital that will allow them to grow.
The show may be entertaining, but it involves real money and requires the same pitching fundamentals that an entrepreneur would need before any other elite investor.
After seeing so many hours of pitches, Herjavec has recognised patterns among those that work and those that flop. We’ve collected the most common mistakes he’s seen entrepreneurs make from our conversation with him earlier this year as well as his 2014 book “The Will To Win.”
They don’t immediately make an impact.
As Lowercase Capital billionaire investor Chris Sacca says, you need to give your potential investor a “fear of missing out” on a huge opportunity that only you can provide them. If you can’t do that within two minutes, it’s almost guaranteed that you won’t be able to with an hour more.
Herjavec tells us that the production process of “Shark Tank” exacerbates this fact. “We film 12 hours a day, seven days in a row sometimes,” he says. “We’re cold. We’re hungry. We’re miserable.”
“So like anything in life, if you can’t sell yourself, you’re not going to be able to sell your business. So that’s what we look for. You gotta engage us. You gotta go out there and you gotta make an impact right away.”
They are unrealistic about the value of their company.
Herjavec respects a “controlled aggression” in a businessperson selling the merit of their company. But a business’ value is based on research and performance. Too often, entrepreneurs will pitch a company to Herjavec and his fellow “Shark Tank” investors at a valuation “far beyond the amount that the real world will accept.”
This is a signal to Herjavec that the entrepreneurs either don’t know what they’re talking about or that they’re being greedy.
“They forget that we are Sharks because we do measure and watch how we spend our money, and are realistic about the profits we hope to earn from it,” he writes in his book. “In many ways, we are not spendthrifts; we’re tightwads.”
They don’t listen.
Savvy investors appreciate entrepreneurs who have spent time crafting succinct elevator pitches, practicing product demonstrations, and memorising their financials. But the point of rehearsing a pitch should be that its material becomes second nature, not an act.
Herjavec writes that he’ll often see entrepreneurs so wrapped up in what they have practiced that they don’t actually engage the investors or answer their questions.
“I know they’re nervous, and I know it’s intimidating to stand in front of us and explain why their gizmos or companies can’t fail, but they have to overcome their nervousness, listen carefully to out questions and understand our response to their answers,” he writes.
They look for a handout.
Herjavec grew up in Halifax and Toronto as the son of impoverished Croatian immigrants. And as an adult, he told us, he started his first company, BRAK Systems, because he was fired from his job and needed to make a mortgage payment.
A fundamental value that his father instilled in him at a young age that got him through financially difficult times was that any money he received he needed to earn, and that he should not accept handouts. Herjavec wishes more entrepreneurs understood that investors exist not to help people achieve their dreams but to make both sides wealthier. Herjavec looks for both a solid product and a passionate entrepreneur.
“If the people looking for our money are apathetic, or appear to be treating the process as a joke, they’re probably not going to work as hard as possible to make their ideas successes,” he writes. “That’s a deal-killer in itself. My dad often said that working hard doesn’t guarantee you will be rich, but not working hard means you’re sure to stay poor.”
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