It doesn’t take getting a deal to make it big on “Shark Tank.”
Some of the biggest success stories from ABC’s hit pitch show, now in its fifth season, walked away from the tank empty-handed. But it didn’t matter. Their companies took off anyway.
“Shark Tank” experts say that, in many cases, the value of getting airtime on the show outweighs the benefits of taking a deal with one or more of the Sharks, which typically requires giving up a precious amount of equity.
“There’s been a lot of studies done on how much it’s worth to go on ‘Shark Tank,’ and there’s a lot of consensus among veterans that it’s worth somewhere between $US4 and $US5 million dollars in marketing exposure,” says TJ Hale, a Phoenix-based entrepreneur and producer of the “Shark Tank Podcast.”
That raw marketing value has led to a new class of contestants on the show: people who seem far more interested in filming a segment than haggling for a deal. “I’ve seen a few entrepreneurs this season where it’s pretty evident that they’re not interested in doing a deal, but they’re extremely interested in the promotion that comes with the show,” Hale admits.
For instance, there was Garrett Gee, who came on seeking a $US1 million investment in exchange for a 5% stake in his code-scanning mobile app, Scan. After he revealed that the company had already raised $US8.7 million, investor Daymond John had to ask: “Why are you exactly here? Is it just for exposure?”
Gee said no at the time, but seemed to suggest otherwise later. He told Business Insider that his decision to go on “Shark Tank” was about 50/50 in terms of seeking exposure vs. the chance for a deal, and he’s previously said that some of the startup’s investors didn’t support Scan appearing on the show in the first place.
Either way, the exposure paid off. After the segment aired, Scan vaulted to the No. 1 spot among paid utilities apps and the No. 20 spot for all paid apps in Apple’s App Store, and became the top-selling app in the Windows Phone store.
Scan won’t be the last business that profits from “Shark Tank” exposure despite not getting a deal, and it certainly wasn’t the first. With the help of Hale and Pierce Marrs, a sales and communications coach who also does a weekly podcast on “Shark Tank,” we compiled a list of five companies that succeeded even though the Sharks turned them down.
Founder Shawn Davis didn’t get any takers when he appeared in Season 2 asking for a $US200,000 investment in Chef Big Shake, a gourmet seafood operation that proudly claims to be the “home of the original shrimp burger.” Since the appearance, however, the company’s sales have soared from their original $US30,000 in 2010 to well over $US1 million. What’s more, Mark Cuban has called Chef Big Shake the one company he regrets not investing in. “He didn’t get an investment, but now he’s just killing it,” Cuban said.
Derek Pacque, the 20-something founder of CoatChex, a ticket-free coat check system, turned down a $US200,000 investment offer from Cuban on the first episode of Season 4. Cuban’s offer matched the funding Pacque was seeking, but demanded a 33% stake — more than three times the equity he wanted to forgo. Since the company’s appearance, CoatChex has landed contracts for huge events like the 2013 New York Fashion Week, Mercedes Benz Fashion Week, and the Super Bowl. The company is projecting to bring in $US500,000 over the next six months through a variety of events, contracts, and new leads, VP of Business Development Adam Loos said.
Taylor, Brooks, and Tanner Dame — three brothers from Idaho — pitched their hand-crafted eyewear company to the Sharks in Season 4, but failed to get the deal they wanted. They walked away from two offers of $US150,000 that both demanded more equity than they were willing to give up. Since their segment ran, their sales have more than tripled to $US1.4 million, and they’re projecting $US2.5 million in sales in 2014, Tanner Dame said. The company also recently opened a flagship store in Boise, Idaho.
Dave Alwan appeared on Season 4 of “Shark Tank” to pitch his old-fashioned, farm-fresh meat company. He asked for $US300,000 in exchange for a 20% stake. Alwan didn’t give a great presentation, but the Sharks loved his product. He was doing $US1.2 million in sales before the segment aired, and his sales more than doubled in the first six months after his appearance on the show. He’s since launched the company on Amazon and QVC, and is projecting sales will reach between $US5 million and $US10 million in 2014, he told Hale. “He’s had the Sharks call him and order from him and give him advice,” Hale said. “He feels like he got the best of both worlds.”
Despite the tremendous publicity value of appearing on “Shark Tank,” sales and communications coach Marrs thinks the payoff ultimately depends on how you come off to the audience. “Just being on the show can be a huge boost for you, but it’s only if the Sharks like it,” Marrs says. “How much success you have if you do or don’t get a deal depends on how much they like the product while you’re on there.”
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