How many Shark Tank companies fail?

The failure rates of Shark Tank participants, however, are significantly lower. In the last few seasons (5 to 9), only 6% of the participants are out of business, and only 20% aren't making a profit (but are still operating). We could therefore say that Shark Tank's success rate is around 94%.

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Shark Tank Failures: 10 Products That Failed & 8 Biggest Misses

Sheet 1,000 VC Firms Information about the countries, cities, stages, and industries they invest in, as well as their contact details. Get the Sheet for $50 Shark Tank is arguably the most popular reality TV shows in America focused exclusively on entrepreneurship. It lets entrepreneurs pitch their innovative entrepreneurial projects and products to a panel of successful businessmen and investors with the goal of securing an investment deal - usually equity in the business (average ~23% in season 10) in exchange for funding (average $286k). Because of this, it’s very curious to see how well the businesses featured on the show are doing. In this article, we’ll investigate some of Shark Tank’s biggest failures: businesses that failed to capitalize on the huge opportunity of being featured on the show, and some of the biggest missed investment opportunities from the sharks. ‍ 10 Failed Shark Tank Companies 1) ToyGaroo What was ToyGaroo: “The Netflix for toys”, a subscription service allowing you to rent different toys every month ToyGaroo’s founders: Hutch Postik, Nikki Pope, Phil Smy, Rony Mirzaians, Young Chu ToyGaroo at Shark Tank: Season 2, Episode 2 Investment: Raised $250k in two funding rounds from Mark Cuban and Kevin O'Leary Why did ToyGaroo fail? According to founder Phil Smy, with whom we have an in-depth interview about ToyGaroo, it was for two major reasons: Sourcing prices: it was hard to source the toys affordably. They were hoping for their newfound investors to help them with contacts at Mattel, but nothing came out of it. Shipping costs: the toys had very different dimensions, so shipping costs would get out of hand. This was a problem because they were running a “free shipping” model. They wanted to get out of it to deal with the problem, but their newfound investors were against it. “Like most SharkTank appearances, we got a spike when the show aired. Which was not what we needed as a sudden influx into a business that depends on stock is not a good thing!” According to Phil, the business would have been much better off growing slowly and organically, as this would have given them more time to deal with some of the sourcing and shipping problems we mentioned above. This, combined with the lack of consensus about the shipping issue, brought Phil to the opinion that the participation in Shark Tank was actually detrimental for the business. All in all, ToyGaroo is a great illustration that Shark Tank is not always a home-run for the participants. The free publicity could come at the wrong time when the business cannot make good use of it, and the relationship with the investors could turn sour. ‍ 2) ShowNo Towels What was ShowNo Towels: A towel shaped like a poncho (with an opening in the middle of the towel for the head) ShowNo Towels’ founder: Shelly Ehler ShowNo Towels at Shark Tank: Season 3, Episode 4 Investment: Raised $75k for 25% equity from Lori Greiner (which didn’t materialize in this way) Why did ShowNo Towels fail? Right from the start, the relationship between Shelly Ehler and Lori Greiner also took a hit. According to Shelly, Greiner warned her not to cash the check on the next day and later on tried to change the terms of the deal (asked for 70% of the company instead of 25%, and when Shelly Ehler refused, Greiner changed the deal to a loan that could be used only for sales rather than other expenses). "[My] Shark Tank deal [with Lori Greiner] turned to crap. I once cursed my 'Shark Partner' for kicking me to the curb. But now I thank her. She taught me so much more than she thought she did and none of it was about business," – a quote from Shelly’s blog post, which is currently taken offline. Moreover, the company had a lot resting on one big deal with Disney. After not impressive-enough sales of the product online, and a profit margin insufficient to meet Disney’s expectations, the deal fell apart after many months of trying to move it forward. Another deal that fell apart was a royalty deal with Franco Manufacturing. The failure of both deals and the tension between the founder and investor lead to the dissolution of the business. Three years after shutting down ShowNo Towels, Shelly Ehler is back in business. She restarted the website and is currently focusing on selling the towels mainly to people with disabilities - a market Lori Greiner didn’t deem large enough to pursue. ‍ 3) Sweet Ballz What was Sweet Ballz: Maker of cake balls retailing at convenience stores Sweet Ballz’s founders: James McDonald and Cole Egger Sweet Ballz at Shark Tank: Season 5, Episode 1 Investment: Raised $250k for 25% equity from Mark Cuban and Barbara Corcoran Why did Sweet Ballz fail? The story of Sweet Ballz is a classic story of two founders falling out. James McDonald and Cole Egger got into a lawsuit shortly after the Shark Tank deal was struck. McDonald was suing his partner because he believed he was developing a competing product behind his back - Egger started operating the competing Cake Ballz brand. Things between the two partners went far enough for a restraining order to be issued. The problem was that the conflict between the founders took place closely after the Shark Tank episode featuring the product was aired, which resulted in a big missed opportunity for the business. The site was offline and the Sweet Ballz domain even redirected to the Cake Ballz website for a short while. After the completion of the lawsuit, the Sweet Ballz website is back in the ownership of James McDonald who was the original creator of the Sweet Ballz brand and product. With the missed Shark Tank opportunity and the dying out of the cake balls fad, however, the business is not doing great and McDonald only runs it as a side gig. ‍ 4) Body Jac What was Body Jac: A fitness machine designed to make push-ups easier for out-of-shape people Body Jac’s founder: Cactus Jack Barringer Body Jac at Shark Tank: Season 1, Episode 5 Investment: Raised $180k for 50% equity from Kevin Harrington and Barbara Corcoran Why did Body Jac fail? In the show, Barbara Corcoran told Jack Barringer that to finalize the investment deal, he had to lose 30 pounds to prove the machine worked. He did so and the deal went through, however, the business didn’t reach any success afterward. The website selling the product was discontinued in 2012 and Corcoran mentioned in interviews that investing in this company was the “worst business deal she had ever made”. There isn’t any public info available for the exact reasons behind the failure of the business. ‍ 5) CATEapp What was CATEapp: A privacy app that hides calls and messages from selected contacts (i.e. a messaging app for cheating) CATEapp founder: Neal Desai CATEapp Shark Tank: Season 4, Episode 2 Investment: Raised $70,000 for 35% equity from Kevin O'Leary and Daymond John Why did CATEapp fail? After the episode aired, the CATEapp had 10k new downloads (most new customers being women). Since the privacy functionality of the app could also work for government and law enforcement, Neal perused those markets. However, it seems the app didn’t become popular enough because it went offline and the last post from its social media accounts was in 2013. ‍ 6) Breathometer What was Breathometer: A portable device working with a smartphone app that measures blood alcohol levels (a portable Breathalyzer) Breathometer’s founder: Charles Michael Yim Breathometer at Shark Tank: Season 5, Episode 2 Investment: Raised $1m for 30% equity from Kevin O'Leary, Mark Cuban, Daymond John, Lori Greiner, Robert Herjavec Why did Breathometer fail? The idea sounded great – obvious from the fact that all five sharks wanted in on the action and invested together. However, the business ran into a lot of problems after the deal. They had trouble fulfilling all the orders they were receiving, and after a short while it turned out the device didn’t work as advertised. The results the device was giving were not accurate and occasionally it reported a blood alcohol level far below the actual value. This is a big problem because it could encourage people to drive when they are in fact in no condition to do so. The Federal Trade Commission got involved and ordered Breathometer to make full refunds to all of its customers (and take the product off the market). Mark Cuban called it the “worst execution in the history of Shark Tank” and blamed the founder for miss-spending the capital. Despite this being a significant failure, the company is still alive (albeit its unknown if the sharks are still in on it). It is currently pivoting and advertising a new (yet similar) product – Mint, which is supposed to measure biomarkers associated with bad breath and gum disease. The company has a partnership with Philips in the area of oral hygiene. 7) You Smell Soap What was You Smell Soap: A luxury soap brand You Smell Soap’s founder: Megan Cummins You Smell Soap at Shark Tank: Season 3, Episode 3, Investment: Raised $55k investment + $50k salary for 30% equity from Robert Herjavec (deal never materialized) Why did You Smell Soap fail? After the on-air handshake deal, Megan Cummins tried to reach Robert Herjavec unsuccessfully for 6 months. Eventually, after doing his due diligence, he came back with an adjusted offer of $50,000 for 50% of the company, which Megan refused. As witnessed from the Show No Towel deal, the change of heart on the side of the sharks is not a rare occurrence. Of course, they are in the right to change their offer after doing their due diligence, but the delay of 6 months with very little communication before making a decision and committing is a huge problem in itself. A quick “no” is preferable to a delayed “maybe” for a new business in desperate need of funding struggling to satisfy rising demand because of a recent appearance on national TV. Megan continued running the business with another investor, who eventually bought the whole You Smell Soap company. Shortly after the purchase, however, the business closed doors. We are left to wonder if the story would have had a different trajectory if Herjavec had acted in a different (and more hasty) manner. 8) HyConn What was HyConn? Fast-and-easy fire hose connectors for hose-to-fire hydrant connections HyConn’s Founder: Jeff Stroope HyConn at Shark Tank: Season 2, Episode 8 Investment: Mark Cuban offered $1.25 million and 7% royalties in exchange for 100% equity, but the deal fell through Why Did HyConn Fail? According to HyConn’s founder, Jeff Stroope, the Shark Tank deal fell through because Mark Cuban started trying to change the terms of the deal. Cuban apparently wanted to start licensing the product to other companies, which he felt would be the most efficient way to bring the HyConn to market quickly, while reducing costs and increasing profits. This would have pushed Stroope out of the company completely, and the founder decided not to accept the new terms of the deal. Although Stroope was able to get a patent for his product, it never actually went into production, and HyConn has shut down since appearing on Shark Tank. This was likely due to lack of funding and business experience on Stroope’s part. ‍ 9) Foot Fairy What was Foot Fairy? An iPad app for measuring childrens’ foot sizes Foot Fairy’s Founders: Sylvie Shapiro and Nicole Brooks Foot Fairy at Shark Tank: Season 5, Episode 29 Investment: Raised $100,000 in exchange for 40% equity, from Mark Cuban (didn’t close) Why Did Foot Fairy Fail? Despite its founders' good intentions to help prevent foot problems in children due to wearing ill-fitting shoes, there were many problems with Foot Fairy’s app and business model from the beginning. The app was intended to make money through commissions from Zappos and other online shoe retailers, which the app’s users could buy footwear from directly through Foot Fairy. However neither Shapiro nor Brooks had any experience with app development, and so they hired developers to build it for them. Unfortunately, the app they built was buggy, and it failed to capture commission payments, preventing the founders from actually earning money through their idea. The deal with Mark Cuban never closed, and Foot Fairy shut down within six months of the Shark Tank episode airing back in 2014. There are now many shoe sizing apps available for smartphones. ‍ 10) Biem What was Biem? A kitchen utensil for spraying butter. Biem’s Founder: Doug Foreman Biem at Shark Tank: Season 8, Episode 4 Investment: Raised $500,000 in return for 14%, from Lori Greiner (deal fell through) Why Did Biem Fail? Biem’s downfall began due to a failed Kickstarter campaign. The first version of the butter-spraying kitchen utensil didn’t work, resulting in a whole bunch of angry Kickstarter backers. There are also numerous Better Business Bureau complaints against Biem for faulty and undelivered products. After Biem’s appearance on Shark Tank, the deal with Lori Greiner fell through, so the company was likely also short on funding needed to improve the product. The Biem website is still up, but the products have all been listed as sold out for years, so it’s safe to say that the company couldn’t figure out how to fix its issues and is now effectively shut down. 8 Biggest Missed Opportunities by the Sharks Of course, from the viewpoint of the sharks, failure doesn’t only mean investments that go bad. It also means missed opportunities that do great. Such deals could be equally painful. Having seen the 10 worst Shark Tank deals, let's move to the 8 biggest misses: ‍ 1) DoorBot (Ring) What is DoorBot: A smart doorbell (IoT) DoorBot’s founder: Jamie Siminoff DoorBot at Shark Tank: Season 5, Episode 9 Ask: $700k for 10% equity DoorBot (currently Ring) has recently bought by Amazon for more than one billion dollars. To put this in perspective, this is higher than the total valuation of all companies in which the sharks invested in 10 seasons. Kevin O’Leary made an offer for $700k, but instead of 10% equity, he wanted 5% equity in addition to 10% royalty that would drop down to 7% after he recovers back his $700k. The royalty was the deal breaker for Siminoff, who mentioned that he wants to upscale the product and the royalty would mean the company would be bleeding cash when it most needs it. Of course, it turned out Jamie did the right decision. The company made $5 million in sales after the episode of Shark Tank aired, and eventually, it raised over $200m of capital first from Shaquille O’Neal and later on from venture capital companies like Kleiner Perkins Caufield Bayers, Qualcomm Ventures, Goldman Sachs, DFJ Growth, and even Sir Richard Branson. This allowed the company to expand its product range and eventually make the deal with Amazon. O’Leary’s ask for royalties, when you draw the line, lost him at least $120 million. ‍ 2) Coffee Meets Bagel What is Coffee Meets Bagel: Dating app based on Facebook friends connections Coffee Meets Bagel's founders: Arum, Dawoon and Soo Kang (Sisters) Coffee Meets Bagel at Shark Tank: Season 6, Episode 13 Ask: $500k for 5% equity The three sisters impressed the sharks with their presentation. Mark Cuban quickly fell in love with application and made the largest offer in Shark Tank's history: $30M to buy the whole business. The sisters weren't interested in selling yet, so they rejected the offer and left the show with no deal. It's not clear how much revenue is the business making nowadays. However, they have raised +$23M in 5 funding rounds and has recently hit 10M users. ‍ 3) Chef Big Shake What is Chef Big Shake: Seafood products, such as Shrimp burgers Chef Big Shake's founders: Shawn Davis Chef Big Shake at Shark Tank: Season 2, Episode 1 Ask: $200k for 25% equity When Davis went to Shark Tank, Chef Big Shake has already sold over 22k Shrimp burgers grossing around $30k. He now needed funds to take his products throughout the whole country. The Sharks considered the deal too risky and decided not to invest in the company. Soon after the episode aired on TV, angel investors offered Shawn $500k and sales grew to $5M in one year. Mark Cuban has publicly regretted not investing into food innovation. 4) CoatChex What is CoatChex: A custom computerized coat check service for bars, nightclubs, and other nightlife industry businesses. CoatChex's founder: Derek Pacqué CoatChex at Shark Tank: Season 4, Episode 1 Ask: $200,000 for 10% equity During CoatChex’s appearance on Shark Tank, Mark Cuban offered $200,000 for a 33% stake in the company, but Pacqué declined the offer. However, the exposure from the show and the good business idea helped CoatChex raise funding from other investors over the next several years, and the company has since expanded its products and services greatly. This rapid expansion led CoatChex to change its name to Chexology, which now provides fully custom personal item checking kiosks and services for many types of businesses and special events. Major Chexology clients include Nike, LiveNation, the Museum of Modern Art, and the House of Blues, to name a few. The company now brings in approximately $7 million in annual revenue, as of June, 2022.

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