There’s a few articles on what happens behind the scenes of Shark Tank. I’ll have them linked below.
According to BusinessInsider, a large portion of this is the financials. The producers go to great lengths to make sure that the investors do not know anything about the entrepreneurs or their products before the contestants enter the room.
Some aspects that come to mind: grilling someone on the industry size, the market opportunity, the size of the niche market they want to target (if they are targeting a niche market), competitors, financial data on their competitors, how they got that data / how they arrive at the assumptions about their competitors, and that’s only the introduction side of things that I can think of off the top of my head.
There’s also expansion and using the Shark’s investment. What sort of growth projections do they have, what does the company look like in 3 year or 5 years in terms of revenue vs cost, what alternatives did the entrepreneur consider when deciding on how to spend the Shark’s money, do they expect to have additional rounds of funding, just a deep dive into the finances for the startup. Oh, and of course – what are the current finances for the startup (revenue and expenses).
On top of this, Sharks also want to get to know the entrepreneurs. There’s a few episodes where the Sharks have walked away from a pitch not because the product was bad, but because they didn’t want to work with the investor. On the flip side, there were also times when Sharks made offers not because they loved the product but because they believed in the entrepreneurs. We get a glimpse into some of the characteristics of these entrepreneurs but I’m sure they go more in depth.
And of course, the negotiations! I don’t believe that the offers and counteroffers are made as quickly as shown on TV. There’s a lot more that goes on for the negotiations, and when large chunks of money and equity are on the line, it takes time to come up with these offers, especially for the Sharks because they know nothing about the entrepreneur nor their products before the pitch.
That’s a pretty generic overview of the process from my startup pitching experience. Let me know if I can clarify anything!
Interesting fact: there is a psychiatrist on set that meets with every entrepreneur to ensure that they are feeling well. I love this and I think that mental and emotional support for entrepreneurs is dearly needed.
Sources and further reading:
14 behind-the-scenes secrets you didn't know about 'Shark Tank'
Mark Cuban Reveals What Happens Behind The Scenes Of 'Shark Tank'
5 behind-the-scenes secrets of 'Shark Tank'
10 Secrets You'd Never Guess About 'Shark Tank'
Diving Into Shark Tank: Uncovering 6 Secrets About the Show