Shark Tank isn’t real venture - Here's why

Hi! I’m glad you’re here. You’ve made it to issue #48 of VC Demystified🪄.

My name’s Nicole - I’m a Principal at an early stage venture fund, and I know firsthand that VC can often be a black box. Breaking into the industry may feel daunting and resources can seem scarce and inaccessible. I wanted to put together a newsletter to give others the playbook I wish I had when I first started.

For those of you who are VC recruiting, here’s some inspiration: I got rejected from numerous VCs before I pitched my current firm to hire me full time. Now I work with some of those VCs closely and/or have been on panels with them. Just keep going!!

Today’s deep dive: A breakdown of why Shark Tank deal terms don’t reflect how venture capital actually works

^{My personal mission is to open as many doors as possible for other people and this newsletter is just one avenue to do that. As always, I will continue to post VC insights daily for free across my socials.}

Read time: 6 minutes

A breakdown of why Shark Tank deal terms don’t reflect how venture capital actually works

For those unfamiliar, Shark Tank is a reality TV show where entrepreneurs pitch their businesses to a panel of wealthy investors (the “Sharks”) in hopes of securing funding on the spot.

While the show offers visibility and quick deals, its terms often differ greatly from traditional venture capital norms.

If you’ve ever watched Shark Tank, you might think startups regularly give up 20-30% ownership for a check under $500K.

But in the real venture world, that’s far from normal.

Let’s break down why Shark Tank’s deals don’t reflect how VC actually works.

The Ownership Gap: Shark Tank vs. VC

Take Poppi, the prebiotic soda brand recently acquired by PepsiCo for $1.95 billion. When founders Allison and Stephen Ellsworth pitched on Shark Tank in 2018, Rohan Oza offered $400K for 25% of the company (!).

For context:

• $400K is roughly a small pre-seed or angel round in VC

• 25% is more than most founders sell in their entire seed round

Compare this to actual VC data from Carta’s Q4 2024 report:

• Seed rounds: typically raise $3.5M for 20% ownership

• Series A rounds: raise $10.6M for 20% ownership

Shark Tank’s deals are far more expensive capital than what a VC would offer.

Another example is Scrub Daddy. Scrub Daddy accepted a $200,000 investment from Lori Greiner for 20% equity in the company in 2012 (!).

Why Do Shark Tank Deals Look Like This?

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