Why shows like Shark Tank are extremely misleading

Shark Tank is an American reality TV show in which "Aspiring entrepreneurs from around the world pitch their business models to a panel of investors and persuade them to invest money in their idea.". It was started in 2009 and is currently in its ninth season.

The show revolves around entrepreneurs who pitch their idea to a group of 4-6 investors and hope to secure an investment from at least one of them. While the idea behind this show is not only to provide a platform for entrepreneurs to win an investment but also improve and inspire young minds who watch this show, the show is extremely misleading.

In each episode, about five startups pitch their ideas to the panel. Each entrepreneur begins by introducing themself, their venture and their ask (eg. $100,000 for 10% stake). This is followed by the panel of 'sharks' questioning them about their product/idea/revenue/future plans and likewise. After this, potential investors either agree to invest or go "out", i.e. not invest. In every episode, at least 1 or 2 entrepreneurs win a deal, or so we are made to believe.

Why is this show misleading? Firstly, the show portrays that deals are easy to make and can be done in a matter of few minutes. This is completely untrue. The actual effort needed to win an investor in the real world is not portrayed. People, heavily influenced by this show believe that an investment can be secured by just asking for a sum of money, negotiating a little bit and then closing the deal. The show create an image of an Utopian world wherein two people bargain as if they were buying fruits and vegetables from a street vendor and both mutually agree or disagree within a very narrow time frame. The time and effort required to convince an investor to part with his money is much more than what we see on television. This creates negative inspiration for people to start their own business without the required skill sets or understanding.

Secondly, the show claims that investors invest their own money with no interference from the producers. While this is most probably true, according to various sources on the internet, it is claimed that only about 6/10 deals actually go through, as the handshake and hug that we see on TV is not at all binding. The due diligence carried out after an investor 'agrees' sometimes takes months and on many occasions has resulted in the deal not going through for other reasons. This side of the show is never broadcasted on TV and gives people an idea that at least 50% of pitches are successful.

Thirdly, the creation of a successor to this show, 'Beyond the Tank' in which, "Six business tycoons, who invested in start-ups, reconnect with aspiring entrepreneurs and check on their businesses to gauge their progress and talk about the difficulties of starting a company" , creates a false image that whenever there is a small problem faced by a company, their investor, who has probably invested in hundreds of other companies will help them sort their issues. The whole basis of this is completely flawed for the reason that these investors who earn thousands of dollars per hour would not waste their time tending to the problems of a company whose valuation is worth pennies. This just proves that the reason they 'care' about these companies is only to create content for viewers like you and me. What is in it for them? According to leaked reports, ABC pays sharks above $30,000/episode of Shark Tank. Clearly, they will be receiving the same, if not more for their time on Beyond the Tank. Well, they do not sound too much more 'caring' about these small businesses now, do they?

While I do agree that Shark Tank has been successful in teaching us basic jargon of the business industry and has given us the basic understanding of various structures of investments (debt, equity, royalty etc.), their way of presenting the show has mislead the masses.

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