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How many Shark Tank businesses fail?

Shark Tank Failure Rates Only 6% of the contestants in the last few seasons have gone out of business, and only 20% haven't turned a profit yet (but are still in business). Therefore, we can estimate that Shark Tank's success rate is around 94%.

thehustlestory.com - The 21 Most Famous Shark Tank Failures - The Hustle Story

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Shark Tank’s track record of success is daunting, and it’s easy to get discouraged when you see the countless products that tanked. But we’re here to tell you that getting rejected by the Shark Tank investors doesn’t necessarily mean your product is doomed. Besides, many shark tank products have been successful and are still growing. For instance, Xero Shoes. For every success, there are just as numerous Shark Tank failures, some more spectacular than others. This blog post will look at past seasons’ most famous Shark Tank failures.

What Is Shark Tank?

Shark Tank is arguably America’s most popular reality show. That focuses exclusively on entrepreneurship. On Shark Tank, entrepreneurs can pitch their innovative entrepreneurial projects and products to a panel of successful businesses. And people and investors to secure an investment. Usually, a stake in the company (average ~23% in season 10) in exchange for funding (average $286,000). It’s always interesting to see what happens to companies that are featured on Shark Tank. But today, we’re going to focus on the ones that failed to get any deal. Are they a success or failed miserably? Let’s find out!

8 Worst Shark Tank Failures

Here is our list of the biggest and most famous Shark Tank failures:

1. ToyGaroo

Product “The Netflix for toys,” a subscription service that lets you rent different toys each month. Founders Hutch Postik, Nikki Pope, Phil Smy, Rony Mirzaians, Young Chu. Season Season 2, Episode 2 Investment $250,000 received from Mark Cuban and Kevin O’Leary.

Why did ToyGaroo fail?

According to founder Phil Smy, there were two main reasons:

Sourcing prices: It was difficult to source the toys affordably. They hoped their newfound investors would help them with contacts at Mattel, but nothing came of it. Shipping costs: the toys had very different dimensions. So shipping costs got out of hand. This was a problem because they ran a “free shipping” model. They wanted to handle the problem, but their newfound investors were against it. Phil felt it would have been much better for the company to grow slowly and organically. They would have had more time to resolve the sourcing and shipping issues mentioned above. This, along with the lack of consensus on the shipping issue, led Phil to believe that participating in Shark Tank has hurt the company. All in all, ToyGaroo is a good example of Shark Tank failure among many Shark Tank failures. Despite that, we can see how Shark Tank is not always a no-brainer for participants. The free publicity could come at the wrong time if the company cannot use it well, and the relationship with investors could deteriorate.

2. ShowNo Towels

Product A towel shaped like a poncho Founders Shelly Ehler Season Season 3, Episode 4 Investment $75,000 for a 25% equity investment from Lori Greiner

Why did ShowNo Towels fail?

The relationship between Shelly Ehler and Lori Greiner was tarnished from the start. According to Shelly Ehler, Greiner warned her not to cash the check the next day. And later tried to change the terms of the deal (she demanded 70% of the company instead of 25%, and when Shelly Ehler refused. Whereas Greiner changed the deal to a loan that could only be used for the sale and not for other expenses). “My Shark Tank deal [with Lori Greiner] went south. I once cursed my ‘Shark partner’ for screwing me over. But now I am grateful to her. “She taught me so much more than she thought she would, and none of it had to do with business” – a quote from Shelly’s blog post, which is currently being taken offline. Also, the company had a lot riding on a big deal with Disney. After online sales of the product were not impressive enough, and the profit margin did not meet Disney’s expectations. The deal fell through after many months of trying to move it forward. Another deal that fell through was a licensing agreement with Franco Manufacturing. The company was dissolved due to both failed transactions and disputes between the founder and the Shark Tank investor. ShowNo Towels is another great example of Shark Tank failure among many Shark Tank failures. Three years after ShowNo Towels closed, Shelly Ehler is back in business. She relaunched the website and is currently focusing on selling the towels primarily to people with disabilities. A market Lori Greiner did not think was big enough to pursue.

3. Sweet Ballz

Product Maker of cake balls sold in grocery stores Founders James McDonald and Cole Egger Season Season 5, Episode 1 Investment $250,000 for 25% equity from Mark Cuban and Barbara Corcoran

Why did Sweet Ballz fail?

Sweet Ballz, a cake ball company, was the clear winner of this season’s premiere show, with all sharks interested in investing. In the end, Barbara Corcoran and Mark Cuban teamed up jointly and invested a combined $250,000.00 during this season’s opener- what luck! The story of Sweet Ballz is a classic tale of two founders at odds. James McDonald and Cole Egger got into a legal battle shortly after the Shark Tank deal went down. McDonald sued his partner because he believed the latter was developing a competing product behind his back. Egger started running the competing brand Cake Ballz. Even the name of his new business was similar to Sweet Ballz. Things between the two partners got to the point where a restraining order was issued. The conflict between the founders of Sweet Ballz occurred shortly after the Shark Tank episode that featured the product aired, resulting in a huge missed opportunity for the cake ball company. The website(Sweet Ballz) was offline, and the Sweet Ballz domain was even redirected to the Cake Ballz website for a short time. Now that the lawsuit is over, the Sweet Ballz website is once again owned by James McDonald. The original creator of the Sweet Ballz brand and product. However, due to the missed Shark Tank opportunity and the extinction of Cake Ball Company. The business is not doing well, and McDonald now only runs Sweet Ballz as a side business. Consequently, we consider Sweet Ballz startup another important one of Shark Tank Failures.

4. Body Jac

Product A fitness device designed to make push-ups easier for people who are not in shape Founders Cactus Jack Barringer Season Season 1, Episode 5 Investment $180k for 50% equity from Kevin Harrington and Barbara Corcoran

Why did Body Jac fail?

The Body Jac is an invention that makes it easier and more effective to do push-ups with a series of bands and target specific muscle groups. On Shark Tank, Barbara Corcoran told Jack Barringer(owner of Body Jac) that he needed to lose 30 pounds to prove that Body Jac worked to close the investment deal. He did so, and the deal went through, but the business did not have any success after that. Barbara Corcoran later called Body Jac one of the poorest deals she’s ever done and declared Cactus Jack took all her money. It is possible that in 2012, Body Jac went defunct. In 2015, Cactus Jack ran his own commerce company, and the Body Jac was available for sale. But after July 2021, the company went out of business. There is no public information about the exact reasons for Body Jac’s failure. But still, we can nominate Body Jac as one of Shark Tank’s biggest failures within many failures.

5. CATEapp

Product A privacy app that hides calls and messages from selected contacts Founders Neal Desai Season Season 4, Episode 2 Investment $70,000 for 35% equity from Kevin O’Leary and Daymond John

Why did CATEapp fail?

After the episode aired, the CATEapp had 10,000 new downloads (most of the new customers were women). Neal looked at the government and law enforcement sectors because the app’s privacy features might not be appropriate for those organizations. However, the app did not become popular enough, as it went offline, and the last post on its social media accounts was from 2013. Nonetheless, we can designate it as one of the biggest Shark Tank failures.

6. Breathometer

Product A wearable device that works with a smartphone app and measures blood alcohol level Founders Charles Michael Yim Season Season 5, Episode 2 Investment $1 million for 30% equity from Kevin O’Leary, Mark Cuban, Daymond John, Lori Greiner, Robert Herjavec

Why did the Breathometer fail?

The idea sounded great, as evidenced by the fact that all the sharks wanted in and invested together. However, after the deal closed, there were a lot of problems. They struggled to fill the many orders, and after a short time. It became apparent that the device was not working as advertised. The device’s results were not accurate, and occasionally it reported a blood-alcohol level that was far below the actual value. This is a big problem because it could encourage people to drive when they cannot do so. The Federal Trade Commission stepped in and ordered Breathometer to give all customers a full refund (and take the product off the market). Mark Cuban called it the “worst execution in Shark Tank’s history” and accused the founder of misspending capital. Despite these Shark Tank failures, the company is still alive and kicking (although it’s not known if the Sharks are still on it). Currently, the company is testing and promoting a new (but similar) product – Mint – designed to measure biomarkers associated with bad breath and gum disease. The company has a partnership with Philips in the oral hygiene space.‍

7. You Smell Soap

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Product A luxury soap company Founders Megan Cummins Season Season 3, Episode 3 Investment $55,000 investment + $50,000 salary for 30% stake from Robert Herjavec (deal never happened)

Why did You Smell Soap fail?

After the on-site handshake deal, Megan Cummins(owner of the luxury soap company) tried unsuccessfully for 6 months to reach Robert Herjavec. Finally, after doing his due diligence, he returned with an adjusted offer of $50,000 for 50% of the company, which Megan rejected. As the Show No Towel deal demonstrated, the change of heart on the part of the Sharks is not uncommon. Of course, they have the right to change their offer after doing their due diligence. But a big problem is a delay of 6 months with very little communication before they make a decision and commit. A quick “no” is better than a delayed “maybe” for a new company that desperately needs funding and is struggling to keep up with increasing demand due to a recent appearance on TV. Megan continued to run the luxury soap company with another investor who eventually bought the entire You Smell Soap company. However, shortly after the purchase, the company closed its doors. The question is whether the story would have taken a different course if Herjavec had acted differently (and more hastily). This high-end soap company deserves some respect even though it was one of many Shark Tank failures.

8. Hy-Conn

Product Fire Hydrant Connector for fire hydrants and garden hoses Founders Jeff Stroope Season Season 2, Episode 8 Investment $1.25 Million for 100% + $100,000/year for 3 years + 7.5% royalty to Jeff offered by Mark Cuban(deal never happened)

Why did Hy-Conn fail?

The company makes a connector for fire hydrants and garden hoses that attaches very quickly. Mark Cuban was so excited about the product that he invested $1.25 million in the company and a three-year employment contract. The deal fell through, however, and the reason sounds personal. The company’s founder, Jeff Stroope, announced on Facebook that the investor’s “ego” affected the negotiations and that “Mark Cuban started to change the deal.” What drove a wedge between the two parties was the licensing of the design. The business has not entirely failed. In any event, it qualifies as one of many Shark Tank failures. There is a professional version of the product and a home version. The company is still active, and Hy-Conn has shipped the product. According to The Huffington Post, the company was worth $5 million in 2015. But as of 2016, the product wasn’t available for purchase, and HyConn eventually went out of business.

Shark Tank Failure Rates

The failure rates in the startup world are incredibly high – over 90% of startups eventually close down. Across all sectors, the average failure rate of startups in year one is 10 percent (except for non-innovative new companies). On the other hand, the failure rates of Shark Tank contestants are significantly lower. Only 6% of the contestants in the last few seasons have gone out of business, and only 20% haven’t turned a profit yet (but are still in business). Therefore, we can estimate that Shark Tank’s success rate is around 94%. The data mentioned above reveal that shark tank participants have a much lower failure rate than the norm for startups. The low failure rates corroborate the notion that appearing on Shark Tank is particularly advantageous for new businesses selling consumer items.

12 Biggest Missed Opportunities By The Sharks

In addition to suffering losses when investments go sour, Sharks also suffer when they miss out on lucrative opportunities by not investing their money and letting the founders walk away. It’s equally painful to witness.

Let’s take a look at the biggest missed opportunities by sharks.

1. Doorbot/Ring Doorbell

Product Video doorbells and security cameras for your smartphone Founders Jamie Siminoff Season Season 5, Episode 8 Investment $700K for a 10% royalty which drops to 7% after $700K is repaid, and 5% equity stake from Kevin O’ Leary; Siminoff made a counteroffer and O’ Leary rejected the deal Jamie Siminoff appeared on season 5 of Shark Tank and introduced himself to the sharks. He asked for a $700,000 investment to get his idea for a video doorbell system off the ground. The company was initially called Doorbot. However, the name was later changed to Ring Doorbell. Kevin O’Leary agreed to the deal but insisted on 10 percent of the revenue share and a 5 percent stake in the company. Siminoff made a counteroffer, and O’Leary rejected the deal. Siminoff walked away without the deal. The Shark Tank sharks missed the big one, as Jezz Bezos and Richard Branson decided to invest in Doorbot, which was renamed Ring when Amazon bought it from Siminoff for $1 billion. That was a missed opportunity.

2. The Bouqs Company

Product Farm-to-Table Flower Delivery Service Founders John Tabis Season Season 5, Episode 27 Investment Asked for $258,000 for 3% but no shark invested in the company The Bouqs Company is an innovative florist business offering direct from farm to table sales. By cutting out the middleman, owner John Tabis believed he could offer lower prices and become more successful. The company was based in Venice, California. He appeared on “Shark Tank” in 2014, and all the sharks didn’t receive the pitch he made very well. Instead of meeting his request with interest, they seemed to pick the business apart. The business was set upon a different kind of business model they didn’t like, so they all passed on the deal. Within just a couple of deals, thanks to other investors who saw the potential and invested $23 million in Bouqs, it was selling $43 million worth of flowers a year. The business took off and became a massive success and this was one of the biggest misses that the sharks made, making it one of their worst errors in judgment.

3. Chef Big Shake

Product Shrimp burger business Founders Shawn Davis Season Season 2, Episode 1 Investment Asked for $200,000 for 25% but no shark invested in the company Shawn Davis is the owner of Chef Big Shake and he appeared on “Shark Tank” to introduce his business concept. He was an experienced chef and had a great idea for a business. Shawn sold frozen hamburgers, fish burgers, chicken burgers, and shrimp burgers. He asked for a $200,000 investment for a 25% stake in the business. None of the sharks showed any interest in getting involved in the deal and sent Davis away without a deal. Davis had made an impressive offer and the food was good, but the risk was too great for them. Shawn had no problem finding other investors to provide him with $500,000 in investment capital. By the following year, the company was earning more than $5 million. Chef Big Shake’s products were sold in over 2,500 grocery stores and it was one of the biggest failures in “Shark Tank” history.

4. Coatchex

Product Ticketless technology for checking services Founders Derek Pacque Season Season 4, Episode 1 Investment Asked for $200,000 for 10% but no shark invested in the company Derek Pacque is the founder of Coatchex and appeared on Season 4 of “Shark Tank” to introduce his company. The company has a wardrobe system that matches people’s faces with their coats. Mark Cuban felt that the company had some merit, but he did not want to go for the deal that Derek had originally proposed. He offered Pacque a $200,000 deal for a 33% stake in the company. Pacque rejected Cuban’s offer. In a counter-offer, Cuban offered him the full amount of the requested investment for a greater interest in the company. Again, Derk rejected the offer. This was a deal Cuban would regret turning down, as Coatchex was awarded major contracts for upscale events and the company grew into a multi-million-dollar revenue stream. This was one of the worst passes the Sharks made, making bad offers that were rejected.

5. Proof Eyewear

Product Collection of wood and acetate eyeglass and sunglass frames Founders Taylor Dame, Brooks Dame, and Tanner Dame Season Season 4, Episode 17 Investment Asked for $150,000 for 10% but no shark invested in the company Proof Eyewear is a unique handmade eyewear company. The products are made from sustainable wood. The owner of the company is Brooks DAME. He and his two brothers joined the Sharks on national television hoping to receive investment to advance their eco-friendly eyewear company. The company uses plant-based plastics and wooden frames, all of which are environmentally friendly, to attract new customers. The Sharks seemed to like the product, and O’ Leary offered to invest $150,000 if they gave him a 25% stake in the company in addition to royalties. The brothers rejected his offer because of the royalties. Herjavec also offered but did not think it was in their best interest. They could not get the deal they were asking for from the Sharks, so they did not go for any of the offers. As it turned out, this was a big mistake on the sharks’ part, as the company became a huge success, selling its brand in 20 countries worldwide. In just one year, they made $2.5 million in sales and the company has continued to grow. If you make bad offers, you are out of luck. Although still, we can say it is a Shark Tank failure surrounded by many failures.

6. Echo Valley Meats

Product Meat Founders Dave Alwan Season Season 4, Episode 21 Investment Asked for $150,000 for 20% but no shark invested in the company David Alwan is the owner of Echo Valley Meats. He is a meat connoisseur and appeared on “Shark Tank” hoping to get a deal on season four. He brought meat samples and the sharks were all impressed with the taste, but they did not like his presentation.

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They were not convinced that David Alwan had what it takes to succeed in new business. They felt that his business plan was unclear and therefore rejected him. That was one of the worst decisions they ever made. He offered them a chance to get into the business, which was worth $1.4 million shortly after Shark Tank aired. Later, Alwan returned to “Shark Tank” and Cuban offered him a deal.

We can still classify it as one of many Shark Tank failures.

7. Xero Shoes

Product The original barefoot sandals and shoes Founders Steven Sashen and Lena Phoenix Season Season 4, Episode 14 Investment Asked for $400,000 for 8% but no shark invested in the company Steven Sashen and Lena Phoenix are the inventors who came up with a novel invention for xero shoes. Instead of using a lot of padding, they believed that their running shoes would give their feet enough support running while also giving them the feeling of running barefoot. The two made their intriguing offer to the Sharks, and although there was interest, Kevin offered them the requested amount in exchange for a 50% stake in their company. This was too much to ask for the investment, and they felt the deal was completely unfair and walked away. After they left, sales picked up, and within a year, they made $2.5 million. The product and the company became a huge success, and no thanks to the terrible offer they had wisely turned down. Nonetheless, we can designate it as one of many Shark Tank failures.

8. HillBilly

Product Clothing for rednecks and truckers Founders Mike Abbaticchio and Shon Lees Season Season 2, Episode 4 Investment $75,000 for 100% + 7% royalty on future licensing deals from Daymond John, Robert Herjavec and Jeff Foxworthy (Founders walked away from the deal) Mike Abbaticchio and Shon Lees invented the clothing line HillBilly and trademarked the name. They appeared on Shark Tank and wanted $50,000 for a 25% stake in the company. Hill Billy Brand already had sales of t-shirts over $270k in just 3 1/2 years from when they first started the company. Most sales of t-shirts were made at sporting events and live country-western concerts where they would set up a booth selling t-shirts to new customers with their brand logo on them.

After the show, however, the deal fell through for a surprising reason.

According to Forbes, investor Jeff Foxworthy said:

‘When we started negotiating with these guys,’ they said, ‘We just wanted to be on TV for the free publicity, we did not want to do a deal with you.’ I sat there thinking, ‘really,’ because you are selling T-shirts out of the back of a van, but if that’s the way you want to go, OK.’ The company’s revenue increased as it gained massive popularity after the show. On July ’21, the company’s revenue was $1 Million annually. Currently, Hillbilly is making approximately $5 Million of revenue each year. However, despite all that, we can still consider it one of many Shark Tank failures.

9. Night Runner

Product 270 degree coverage shoe lights Founders Renata Storer and Doug Storer Season Season 8, Episode 3 Investment $250,000 for 15% + $100,000 loan from Robert Herjavec(Founders walked away from the deal) Renata and Doug Storer appeared on Shark Tank to introduce their running shoes with rechargeable LED lights illuminating the path. They managed to get an offer for their running shoes from Robert Herjavec, who offered $250,000 for 15% of the company. But the deal did not happen after the show because the business owners changed their minds. “After the show aired, we did not need the investment and we thought, why to give up equity if we do not need it,” Storer told Forbes. “Plus, they were offering fewer dollars for the same equity. We came to the mutual decision that the deal was not in our best interest.” The risk paid off for them and the running shoes are still selling. According to Forbes, they sold their website in 2015 and made $1.5 million in sales. Yet it can be categorized as a Shark Tank failure by many others.

10. Three65 Underwear

Product Subscription-based business of underwear and socks for men Founders William Strange Season Season 1, Episode 12 Investment $60,000 for 25% equity from Janine Allis and Naomi Simson(Founder walked away from the deal) William Strange came on Shark Tank to present a subscription model for men’s underwear. The Subscription model for men’s underwear can acquire a customer and keep them as a customer. He got an offer from Janine Allis and Naomi Simson, who offered him $60,000 for 25% of his business. But again, things changed as soon as the cameras were off. Strange was working on not one but two startups at the time. The Sharks warned him that he would eventually have to choose between the two, and he did. Strange wrote about his decision to turn down the deal and focus on his business. However, as of 2022, the company is still in business. Nonetheless, we can designate Three65- the subscription model for men’s underwear as one of the Shark Tank failures within the many failures.

11. Grinds

Product Pouches of flavored coffee alternative to chewing tobacco Founders Pat Pezet and Matt Canepa Season Season 4, Episode 15 Investment $75,000 for 15% equity from Daymond John and Robert Herjavec(deal never happened) Pat Pezet and Matt Canepa are the owners of Grinds. This company sells bags of chewable coffee. Daymond John and Robert Herjavec agreed with them for a $75,000 investment in exchange for a 15% stake in the company. Negotiations continued after Shark Tank ended but went awry and the deal was called off. That same year, Grinds had a successful year without the help of the sharks, who tried to change the original deal. And the company took in $1.35 million and expected to make more than $4 million the following year.

12. Qubits

Product STEM toy blocks Founders Mark Burginger Season Season 1 Episode 14 Investment $90,000 for 51% equity from Daymond John(deal never happened) In Season 1, Mark Burginger introduced a puzzle-like toy that can be used to create geometric shapes and designs. Burginger has a patent on the product and asked for a $90,000 investment in exchange for a 51% stake in the company. Daymond John was the investor who chose Burginger, on the condition that he tries to get one of the top four toy companies to make a deal with him. After Qubits made representations to the top four toy companies, it appeared empty. According to Shark Tank’s blog, this also meant the end of the deal. However, the toy company is still moving forward, and you can find the toy on Amazon. As of 2021, Qubits is still in business and has generated an estimated $6 million in annual revenue. Although still, we can say it is a Shark Tank failure surrounded by many failures.

Interesting Shark Tank Statistics

Now that we have discussed the 20 most famous shark tank failures, let’s discuss some interesting statistics regarding the show’s contestants, sharks, most important deals, pitches, etc.

A small selection of findings of Shark Tank up to season 10:

Total 222 episodes, 895 pitches, 499 deals, $143.8m of invested capital, and nearly $1B in company valuations.

56% of contestants complete a deal

Women are underrepresented on Shark Tank and secure fewer deals

The average deal amount is $286k; the average equity given up is 27%

Food (20%) and fashion (19%) are the most famous pitch industries

Mark Cuban is the most prolific deal-maker (151 deals up to season 10)

Shark Tank Contestants

Of the 10 Shark Tank contestants, six were men, meaning less than one-quarter were women. According to the US Department of Labor, women own 36% of all American businesses, indicating that female entrepreneurs are under-represented even in the carefully cultivated world of reality television.

Shark Tank Pitches

According to the data, the top three industries for pitches were food and beverage (20%), fashion and beauty (19%), and lifestyle and home (16%). It appears that booze and cupcakes are a hit with Shark Tank producers. The popularity of various industries has changed over time. For example, during seasons 1-10, the proportion of food and beverage pitches increased by 15%, while children’s products declined by 10%.

Conclusion

With so many reality shows on television, it can be easy for many of them to be overlooked and buried, some even ignored completely. Contrary to popular belief, however, some reality shows on TV are very useful and offer lessons that you will find useful. In the show Shark Tank ( ABC), which spans 6 seasons. Aspiring entrepreneurs and business people seeking funding or investment for their products or business appear as contestants and face a panel of investors the “sharks”. Depending on how they make their presentation, they may go home with a substantial amount of money invested in their new business or no money at all, but at least they get some business advice from the experts.

thehustlestory.com - The 21 Most Famous Shark Tank Failures - The Hustle Story

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