Analyzing What Makes a Shark Tank Pitch Successful

Authors: Riddhi Sood (Project Lead), Megha Velakacharla, Patricia Cheng

Shark Tank is a reality show where entrepreneurs and business owners pitch their ideas to a panel of investors for money. The TV show also shares many characteristics with the typical flow of angel money so much so that, if you’re considering looking for funding for your company, you need to watch enough Shark Tank episodes to comprehend the key ideas of valuation, market size, scalability, gender bias in the respective deals and negotiation. This article is a good start to dive deeper into analyzing six main Sharks on the show- Mark Cuban, Barbara Corcoran, Lori Greiner, Robert Herjavec, Daymond John and Kevin O’Leary.

This graph summarizes the different industries of companies the sharks tend to invest in, and the total investment percentage agreed upon by the entrepreneurs and the sharks in successful deals. We used this graph to compare what type of businesses a particular shark is most likely to invest in, as well as how much they tend to invest in that business in comparison to the amount of money that the entrepreneurs asked for. For example, the Food and Beverage category seems to be the category with the most investments from the sharks, with a total of 100 successful deals; the 2000% investment percentage agreed upon by the entrepreneurs and the sharks means that the deals are usually set only by 20% of the investment amount that the entrepreneurs asked for, on average.

Being the shark with the most investment, Mark Cuban invested the most in Food and Beverage, with 59 deals out of the total 100 deals coming from him. However, the bar graph above shows that he seems to only invest a little less than 18% on average of the investment amount asked from the entrepreneurs, which is lower than the average percentage we observed. Mark seemed to also invest in categories like Education and Fashion. As seen in the graph, there are also sharks like Kevin who are very selective in what they invest in. Interestingly, categories such as Decoration, Rental, and Productivity have almost no chance in getting a deal with the sharks.

Starting with another factor that is market size, sharks prefer to invest in enterprises that have a wide range of potential customers. They choose interesting niches that have room to expand rather than narrowly defined ones that appear to be static in size. Even though it is not the deciding factor, historical data from previous seasons proves the resistance of sharks in specific areas out of their expertise.

Our team began by categorizing and filtering the dataset from the previous 12 seasons in respective industry categories. To further illustrate the trend of deal volume across all seasons, we employed a continuous line graph. By far, food and beverages (24%) are more likely to get a deal and in contrast sharks tend to avoid stepping in retail deals(0.3%).

There is further a 60% chance of getting closer to finalizing the offer if the company adds value to more than one particular best-selling product line. Thus, scalability plays a crucial driving factor in this area unlocking more potential for these investors.

Next, our team analyzed whether gender played a role in the success of pitches. While there are more male teams than female teams, female teams and mixed teams have been slightly more likely to be offered a deal.

However, when teams are offered a deal, male entrepreneurs are generally offered more money as investments. This could be because male entrepreneurs are more likely to request a higher investment amount, although it is more likely that women’s asking amounts are more likely to be negotiated downwards due to the sharks implicit biases. Gender bias in the workplace is not a new phenomenon. Often, men are judged based on their potential, whereas women are judged based on what they have previously accomplished.

Evidently, it is crucial to adapt a pitch towards the investor as explicit factors, such as the industry and asking amount, as well as unconscious biases in areas such as gender are inevitable.