Being a shark in Shark Tank Colombia: the facts and the fiction
Shark Tank is a popular Sony Entertainment reality television franchise that has appeared on screens around the globe in a variety of formats. It’s known by multiple names, too: The Tigers of Money in Japan, Lion’s Den in most of Europe, and Shark Tank across the Americas and Australia. Colombia’s version is broadcast all over Latin America as well as on YouTube. I participated as one of the sharks in the majority of episodes that comprised the first three seasons.
So what sort of return on investment did I make, you ask?
First of all, I’d like to clarify some of the series’ myths (and realities). While my observations are based on my own experience, they are — certainly to my knowledge — applicable to all versions of the Shark Tank franchise.
What’s real
- As sharks, we invest our own money.
- The pitches are real, but only a small fraction of each pitch is broadcast. Pitches actually last between 30–60 minutes, but the post-production team edits them down to ~10 minutes.
- The reactions of the sharks and the negotiations are real. They are not scripted in any way. The only production prescription is that we use the phrases ‘I have an offer’ and ‘because of that, I’m out’.
- If an agreement happens on camera, the shark performs due diligence and follows through with his or her investment should the prospect show real potential.
- And yes, investments do happen.
What’s not so real
- In Shark Tank, investors are exposed to pitches that have been selected by the production team. They select both good and bad companies for dramatic purposes. In real life, investors determine who they want to listen to themselves. We seldom listen to someone we know will waste our time.
- The sharks don’t know who will be pitching next. We find out about the companies and entrepreneurs on the way to the stage and while seated shortly before each pitch starts. While some demo days might work like that, in real life, most investors learn about companies seeking investment by reviewing their decks (received mostly via email).
- Some companies only go to Shark Tank for the sake of publicity.
- Investors have little control over the program format. In real life, investors develop and manage their own mechanisms. If Shark Tank were a circus, we wouldn’t be the owners; we’d be the clowns!
- The terms offered by the sharks tend to be aggressive and favor the investor more than the terms commonly observed in real life — especially in the tech sector.
What happens after the pitch
It depends on the shark. In my case, a member of my team reaches out to the entrepreneur to start due diligence (which is an ‘investigation to confirm facts or details of a matter under consideration’). Some entrepreneurs back out of the deal here. Some actually told us that their whole pitch was fictional (if not an outright lie) and they only wanted the exposure. Alternatively, they simply ignored our messages.
On one occasion, I backed out. I made an offer in a sector I had little experience in. Off-camera afterwards, I found out a lot more about the sector and subsequently figured the investment would have been a mistake. It was a tough decision to make (as an apology, I offered my support to the entrepreneur. Since then, I’ve referred dozens of the clients to his company).
Due diligence lasts from a few days to several months — depending on the deal. Some deals fall apart during this process. Common reasons are accounting irregularities, not owning the intellectual property, or products not performing as demoed. In a few cases, we also concluded the entrepreneur took the fake-it-‘till-you-make mentality too seriously and the traction numbers and key metrics they had shared were pure fantasy.
If we find the results of the due diligence satisfactory, we have our attorneys review the requisite legal paperwork. If everything looks above board, we sign the deal and wire the money.
I then own a portion of the business I invested in. As the value of the shares grow, I have gains — on paper. They’ll become a reality only when someone opts to purchase shares from me. Until then, my gains are unrealized. In some cases — and depending on the agreement — I actively help the entrepreneur grow the company.
It becomes a waiting game — until the entrepreneur emails me one fine day and tells me that s/he has sold the company and made me tons of money, thankyouverymuch! I now have heaps of realized gains.
My stats
I’m a numbers person, so here is how I performed on Shark Tank:
- Seasons: 3
- Days of filming: 16
- Pitches: 126
- Investment offers made on camera: 20
- Investment offers accepted on camera: 20
- Entrepreneurs who backed out of the deal: 5
- Deals I backed out of: 2
- Deals that fell through because they failed due diligence: 5
- Deals where things got quite complicated: 1
- Deals done (I deployed the capital): 7
- Smallest deal: $5,000
- Largest deal: $235,000
- Total investment (including cost of time): $668,000
- Current estimated value of my investments: $2,010,000
- Unrealized gains: $1,342,000
- Realized gains: $0
- Return on investment so far: 297%
I also made seven non-monetary offers in donations and/or by accepting the entrepreneurs into my company accelerator for bootstrapped businesses.
My best investments in Shark Tank
Unsurprisingly, my best Shark Tank investments are all in the tech sector. These are the top three:
Kiwibot: IRR 58.7%
Kiwibot builds robots for last-mile delivery. Since our investment, they have raised numerous additional rounds, including a widely popular crowdfunding campaign.
LiftIt: IRR 65.7%
LiftIt is an “Uber for cargo” in LatAm. Since our investment, LiftIt has raised over $35M from Cambridge Capital, IFC Venture Capital Group, and monashees.
Vaki: IRR 76.2%
Since our investment, Vaki (originally known as La Vaquinha) has become the largest crowdfunding platform in LatAm.
My other comparable investments
As angel investor:
- Cornershop: IRR: 80.7%. Cash-on-cash: 34x (sold to Uber).
- VivaReal: IRR 29.1%. Cash-on-cash: 12x (merged with ZAP, then sold to OLX).
As a tech founder (excluding my salary):
- Voice123: IRR 58.5%. Cash-on-cash: 1040x.
- Bunny Studio: IRR 63.1%.
Positive, non-monetary returns
- I’ve learned much from my fellow sharks and the entrepreneurs. Each shark has a significantly different style, background, and strategy. I realized that becoming a successful investor can happen following radically different approaches. The entrepreneurs are full of passion, ideas, and, more importantly, persistence. Learning from them triggered the creation of my accelerator.
- The exposure and credibility associated with being a shark in Shark Tank are practically priceless. I find it significantly easier to arrange meetings and gain trust than before.
- The experience of being in a reality show and watching a production team of over 100 professionals in tight coordination has been absolutely jaw-dropping.
Negative returns
- The exposure has its downsides. I am now easily recognized across LatAm. Given the safety situation in many of the countries on the sub-continent, I can’t just wander around freely anymore. Fortunately, I live in California’s Bay Area. I do find I now need to take security precautions when traveling to some places in LatAm.
- The opportunity cost is high. I could have done more with the time spent filming and supporting the show, for example. I could have done other things that yielded better returns. In fact, since we started recording the first season of Shark Tank Colombia in 2017, I’ve been able to create three other companies — that are doing well (fortunately!).
- My credibility has suffered, too. In certain tech sector circles, Shark Tank is regarded as a hoax and a waste of time for real entrepreneurs.
The best return
By far my best return has been my audience. Today, I have half-a-million followers on four social media channels with whom I interact frequently. I answer their questions and share what I know. Periodically, I receive messages telling me how I positively influenced their decisions, their businesses, and their lives. It’s both an honor and a responsibility. I’ve discovered that teaching and positively influencing others are the best ways for me to give back to society — and I love doing so!
P.S. Kitsmile makes therapeutic chairs for children with motion limitations and paralysis. They pitched in Shark Tank. Fortunately, the offer made by a fellow shark for 40% of the company didn’t go through. Instead, I offered a donation. With it, and with Vaki’s further support, 150+ children and their families that haven’t been able to afford the chair, now have it. What’s more, you can help, too. If you’re feeling sharky, visit KitSmile profile in Vaki and make a donation!
Thanks to Carel Cronje, Daniel Bilbao, Marcela Lopez, and Tania Zapata for reading and commenting on drafts of this article.
