3 Shark Tank Failures That Made Millions
3 Shark Tank Failures That Made Millions
By
Justin Walton | October 15, 2015 AAA |
TV’s "Shark Tank" has led many entrepreneurs down the path to success and riches. Entrepreneurs on the show present their sales pitches in search of funding, and investors – the sharks – who want to invest in the companies then make funding proposals to the business owners. While many participants on the show are offered deals, some are not, and others are unwilling to accept the terms and walk away. The majority of the
most successful products pitched on the show have been backed by the sharks. However, many entrepreneurs who left without deals have gone on to enjoy great success with their products.
Ring
The CEO of Ring, Jamie Siminoff, pitched the product, then called DoorBot, as a caller ID for your door. It is a doorbell with an integrated video camera that sends alerts and the video feed directly to the owner's smartphone. Homeowners are then able to see and speak with whoever is at the front door, or ignore the visitor completely. The device allows homeowners to give the impression they are at home when they could be anywhere in the world. Since many burglars tend to ring the doorbell to see if anyone is home before they break in, the device comes in very handy as an added security measure.
During his appearance on the show, Siminoff was already enjoying $1 million in annual sales and seemed confident the sharks would be fighting for the chance to invest. He was asking for $700,000, valuing his company at $7 million. One by one however, all of the sharks backed out except for
Kevin O'Leary, who offered him a $700,000 loan, a claim to 10% of all sales until the loan was paid off, a 7% royalty on all future sales and 5% of the company's equity. Siminoff turned the deal down and left empty-handed.
After taping the show, sales continued to improve and Siminoff raised the $700,000 from other sources before the show even aired. After DoorBot aired on "Shark Tank," Siminoff estimates sales jumped an additional $5 million. Billionaire Richard Branson is part of an investment team that raised $28 million in
venture capital for Ring, giving the company a $60 million valuation. As of 2015, Ring devices are available in 93 countries through outlets such as Home Depot, Target and Best Buy.
Coffee Meets Bagel
Branding itself as the online dating site that women prefer, Coffee Meets Bagel aims to find one quality match for users every day using friend connections on Facebook. If both parties like the proposed match, the app offers them a discount to use on their date, such as getting a cup of coffee or a bagel.
When sisters Arum, Dawoon and Soo Kang appeared on "Shark Tank," they were offering the sharks a 5% equity stake for $500,000. Impressed with the presentation and the product, Mark Cuban made the largest offer in the show’s history – $30 million to buy the entire company. Not wanting to walk away from the company, the sisters quickly decided to walk away with no deal. After gaining such wide exposure from the show, the Kang sisters raised $7.8 million in Series A funding. The app is now available on both Android and Apple devices.
Chef Big Shake
Inspired by his daughter's interest in vegetarianism and recognizing a market opportunity, Shawn Davis pitched his specialty seafood burger business to the sharks, asking for $200,000 for a 25% equity stake of the company. Davis wanted to tap into the vegetarian market with foods such as burgers that relied upon seafood rather than traditional meat sources.
While the sharks thought the venture was too risky and passed on the opportunity, after the episode aired,
angel investors seized the opportunity by offering Davis $500,000. Annual sales for Davis' company, CBS Foods, grew from $30,000 to $5 million in just one year.
