Shark Tank schenanigans

Over the last year, I've been frequently riveted by this show called 'Shark Tank', which airs on the channel Colors Infinity. It's about these self-made millionaires and billionaires who are experts in their respective fields, which range from specialising in venture capital funding, technology, and so on. Six of them sit patiently and listen to entrepreneurs pitch their unique and innovative business ideas and decide whether it is worthwhile to invest in those businesses. Initially, people thought it was simply a reality show for views but then after deals of great magnitude started formulating, the show gained momentum. Notable examples are the 'Bantam Bagels', whose products were acquired by Starbucks, the 'Breathometer', which attracted injection of funds from all 5 Sharks, and 'TenThirty One', a horror entertainment company. As the seasons have gone by, even the mere appearance of a business on the show has garnered enough publicity for it to increase its sales drastically. I think the show has helped promote entrepreneurial spirit and encouraged people to mobilise their funds into a productive venture. Some key elements on the show which viewers may have heard about are:

• Equity: This is a fancy business word to refer to the ownership stake in a company. It is measured by types of divided units called 'shares'. When the entrepreneurs ask for investment for a certain percentage of their venture, they want the Shark to have that much ownership stake in the company.
• Valuation: The Sharks often say stuff like 'So your company is worth $10 million according to you..'. They calculate this by dividing the funds required by the ownership stake, i.e if the pitcher asks for $100000 for a 10% equity stake, the company (according to the owner), is worth $10 million.  This is an important factor to consider as a lot of deals depend on whether the company is correctly valued.
• POs: These refer to purchase orders. Often, in deals, the Sharks agree to invest in the company as well as provide further assistance by funding the buying of raw materials, components, or wholesale goods to keep the business flowing and managing inventory. This is usually done when the Sharks don't want to pony up the complete amount but still want to be involved witht he business.
• Royalty: When the Sharks invest huge amounts into businesses (going into millions), they will most probably require a fee to be paid to them for their funding and services (advisory or otherwise), known as 'royalties'. These are paid until the business is big enough or till a stipulated period. 'Franchise' refers to the permission granted for selling and marketing products.
• Patent: This is protection provided to an inventor of an idea or original concept. It is an intangible asset of a company provided by the Government. It's necessary because there are plenty of charlatans ready to twist your idea around and make money off it. Trademarks and copyrights are related terms but apply to brands/designs and works of art respectively.
• Angel investments: These are injections of funds of great magnitude into a rising company, generally tech start-ups. The most notable example of this is Peter Thiel's $500000 investment in Facebook, which really seated the latter at the "big boys'" table.
• Margins: Often the Sharks ask the entrepreneurs what their 'margins' are. They're referring to profit margins on the cost of producing a unit of the product. The greater the margins, the greater the returns, obviously.
• Stock keeping units (SKUs): This is another term often heard when the Sharks ask about a pitching company's operations. It either refers to a distinct item for sale which differs from the other items noticeably. SKUs also refer to unique identification codes on products to keep track of them. Sharks love efficient inventory management.

The Sharks: (current appearances)

Mark Cuban: He's a tech billionaire and the owner of the basketball team, the Dallas Mavericks. He's generally quite friendly and willing to invest and is willing to take the extra risk.

Chris Sacca: He's a former Google employee who quit and started his venture capital fund 'Lowercase Capital'. He's invested in world renowned companies like Twitter, Instagram, and Uber.

Kevin O' Leary: He's a venture capitalist who is worth billions of dollars. He's supposedly the coldest of the Sharks and will not invest in a company until he's completely sure of its viability and returns. It isn't east to sway him with visions of the future and is more interested in the numbers.

Lori Greiner: She's also a venture capitalist who owns over 120 US and foreign patents. She's regarded as the 'queen of QVC'.

Robert Herjavec: He's a multimillionaire who founded one of Canada's foremost tech companies (for cyber security). He started off with helping his father with farming and can now probably purchase a few hundred.

Other appearances include that of Daymond John, Barbara Corcoran, and even Ashton Kutcher.

It's an extremely engaging show(engaging because you never know which business will be chosen for a deal; the Sharks often have slow days and days when they feel excessively generous. While it is quite subjective, the Sharks often invest in companies which have realistic ideas and plans for the future and also ones which have social utility.

The show is currently averaging 9 million views per episode in its 7th season.