"The company made $100k in profit in six months. Yet they only asked for $150k. What could they do with $250k in capital that they couldn’t do with the $100k that they already had? And if they waited another six months"
What could they do? It's not the money.
I consulted for someone who was on Shark Tank and got funded.
The reason you go on Shark Tank is:
a) You get national publicity and that national publicity gets you sales as well as all sort of attention. In the particular case that I am familiar with, sales increased 3 to 5x iirc. And that national publicity opens doors with companies and individuals in the business world. (We aren't talking about being featured on Techcrunch here - big deal.)
b) The Sharks really do have contacts, real world contacts, and do and did seal deals and get the particular product in question national distribution. Just like that.
Of course you try to make the best deal you can it is almost a sure bet given the right product and fit with the right Shark (which is generally taken care of by the Shark since they don't put money into what they don't know about or can't help with.)
And when you get a shot at being on a TV show with a national audience, you don't wait 9 months and hope you get picked for the next season. You jump at the opportunity. Even if you don't get funded the publicity alone is a no brainer.
Indeed, and the fact that the national publicity is the real value/deal-lubricator is why the show itself gets an equity or royalty stake in every company which appears:
"why the show itself gets an equity or royalty stake"
By the way, originally that was not the case it changed at some point. But that's a good thing as it motivates them to a) show follow ups "how are they doing?" (which cause a bump in sales) b) include the company in re-runs (which causes a bump in sales as well (I've correlated it).
Thats truly fascinating, makes one wonder if other networks will jump into the act once ABC has their first home run.
What worries me though is its only a matter of time until someone figures out they can do this with a startup reality show. If you think the prospect of a silicon valley reality show is bad now (glorifying the supposed "startup lifestyle", launch parties, founder drama, etc.) just wait until the network has a significant stake in the startups that they are promoting...
It depends what your goal is. If you need more funding or are looking for an exit then yes. If you need partnerships and your target companies lurk in the area you're getting publicity, then yes.
But if you don't need funding, an exit and aren't looking for partners, but are focusing 100% on your customers, then often this kind of publicity is an unhelpful distraction.
It's rare that when you get publicity among entrepreneurs and investors, you are also reaching your customers.
So for many businesses who don't need investment and don't need/want an exit, getting on HN, TC, Shark Tank, etc is less than unhelpful, it's a distraction and a waste of valuable time.
So why do so many young companies spend so much time courting the Arringtons and Cubans of this world? Because they are gagging for recognition, acknowledgement and the social proof that they're not completely wasting their time. It's a little like the need that most humans have for the existence of a God or big-daddy-in-the-sky that tells them they're doing OK and that it's OK to screw up occasionally.
What could they do? It's not the money.
I consulted for someone who was on Shark Tank and got funded.
The reason you go on Shark Tank is:
a) You get national publicity and that national publicity gets you sales as well as all sort of attention. In the particular case that I am familiar with, sales increased 3 to 5x iirc. And that national publicity opens doors with companies and individuals in the business world. (We aren't talking about being featured on Techcrunch here - big deal.)
b) The Sharks really do have contacts, real world contacts, and do and did seal deals and get the particular product in question national distribution. Just like that.
Of course you try to make the best deal you can it is almost a sure bet given the right product and fit with the right Shark (which is generally taken care of by the Shark since they don't put money into what they don't know about or can't help with.)
And when you get a shot at being on a TV show with a national audience, you don't wait 9 months and hope you get picked for the next season. You jump at the opportunity. Even if you don't get funded the publicity alone is a no brainer.