How Would You Do in the Shark Tank?
I saw the new show Shark Tank the other night, and found it very interesting. Inventors and entrepreneurs would approach the shark tank, a panel of five venture capitalists, and present their business plans, hoping to negotiate an offer from one of the sharks for the money they needed in exchange for a share of ownership in the company.
It was no surprise that over-valuations ran rampant, but what I was really glad to see was the care that the sharks took in determining the percent of ownership they would accept. It was really quite simple. If the shark thought the concept was profitable enough and the entrepreneur had a good grasp of the critical variables that need to be controlled for the business to succeed, then the shark would accept a 50% ownership share. If the entrepreneur did not understand their critical variables, the sharks required at least 51% ownership before they would invest. Obviously, they wanted the controlling interest to protect their investment from the entrepreneur they were partnering with.