Reality show exposes world of venture capital investing
Posted: October 14, 2009
By Arlinda Smith Broady

Whether you’re a fan of so-called “reality” television, few will argue much of it is far removed from real life.

A washed-up celebrity chooses from a group of opportunists vying for his affections, a marginally famous family airs their dirty laundry to the nation or average joes compete to be the next superstar chef or model or singer – hardly everyday occurrences.

One reality show, however, goes beyond the genre. On ABC’s new hit, “Shark Tank,” entrepreneurs seeking capital are given the chance to pitch their innovative business concepts, products, properties and services to “sharks” in hopes of landing a deal.

Although funding is the primary objective, the expertise of the eclectic mix of moguls could bring about bigger rewards such as marketing, distributing, manufacturing, etc.

But they don’t call the five real-life, tough investors sharks for nothing. On more than one show, I’ve seen them turn on each other, trying to out maneuver the other and go in for the kill.

And from what I hear, it’s not much different from actual venture capital deals.

“It’s almost identical to real life,” said Barbara Corcoran, real estate tycoon and my personal favorite shark. “It’s condensed for TV and unlike real life, we don’t have advanced information.”

Corcoran said she almost didn’t get the gig, but in true predator fashion, she fought for her spot.

“After I was rejected, I wrote back a strong e-mail,” she said. “The other woman was half my age and better endowed, but once I got started, I held my own.”

She said it took her a few episodes to get into her groove, because she’d listened to the Hollywood advice instead of trusting her gut.

“I kept the humor and smiled and decided to just be myself,” she said. After all, that’s what helped her parlay a $1,000 loan into a $5 billion real estate business.

But much like the real deals, money is at stake and lives are changed by the outcomes.

Bloomfield, Ind., native Sawyer Sparks successfully pitched an idea for a soy-based molding dough product. He ended up with $300,000 – $100,000 each from three of the investors for a 51 percent interest in his product – Soy-Yer-Dough.

One of the aspects I like best about the show is the unpredictability.
And that’s what roots it in reality, said executive producer Clay Newbill.

“This is real people with real ideas who are passionate about their businesses,” he said. “Even if the idea doesn’t seem like it’s the most profitable, the entrepreneurs have to sell it … They have to have a fire in their belly.”

Perhaps that’s what drew several sharks to two University of Arizona graduates who were looking to grow their Internet start-up. Called Notehall, the online note-sharing site allowed students to buy and sell lecture notes and study outlines. The entrepreneurs said they’ve taken steps to preclude the sharing of tests or information that could constitute cheating.
The confidence the team showed in their service got the sharks fighting among themselves. In the end, Corcoran emerged victorious, despite her lack of knowledge in the field.

And it wasn’t just her money that attracted them to her – it also was her humanness. With Corcoran, the guys expected to thrive, not just survive.
“That’s the draw, half of what sells the idea is the person – from both perspectives,” said Newbill. “Another important aspect is strategy.”
One example he pointed out was an exercise video pitch in which the company asked for too much money.

“They may have made a deal if they’d started with a third of what they asked for,” said Newbill, adding that $700,000 was a lot to invest in unknowns in such a competitive industry.

What happens after the cameras are turned off is probably just as interesting to viewers.

That’s why the show is keeping tabs on the contestants, said Newbill. A second season that’s planned, but not yet confirmed by the network, will follow some of those deals.

And they’ll be looking for more business owners willing to dive into the shark tank – if they dare.

ABOUT THE SHOW -
“Shark Tank” airs 8-9 p.m. Tuesdays on ABC.
The Sharks of “Shark Tank” are real estate mogul Barbara Corcoran, “infomercial” industry pioneer Kevin Harrington, technology innovator Robert Herjavec, fashion icon Daymond John and financial expert Kevin O’Leary.
To view past episodes or to become a contestant, go to www.abc.com.