The investors, or “sharks,” have sat through 93 episodes and have heard 377 pitches from aspiring entrepreneurs. Together, they have invested over $20 million in 109 different companies. These entrepreneurs have managed to make 186 deals with the sharks, but only a third of the deals made on the show actually close. Why is this? 25% of startups fail in their first year, and an already volatile business climate even for the most successful businesses makes it risky for investors to put money into a start up, which has no track record to speak of yet.
A Start Up is like Building Rome
Aspiring entrepreneurs need to do three things: find something that consumers need, have the ability to sell it, and make a profit from selling it. Extensive knowledge of the market is needed to pull this off. Nowadays, consumers have more access to information about the products and services you and your competition will be providing. To top it off, they are very fickle and often bounce from one trend to the next. Entrepreneurs state that they wanted to capitalize on a business idea, but almost 50% fail due to incompetence. In addition, some ideas just come at the wrong place at the wrong time.
Numbers Don’t Lie
Investors want to know the data. They want to know how much they’ll be getting out of your product and service. For example, these contestants on the show stated how businesses having a self-waving sign can drastically cut costs (and prevent certain costs from even happening, such as legal costs should something happen to humans), stating it will pay for itself in a few weeks at an initial cost of $1,599.