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Those Deals You See Entrepreneurs Celebrating on 'Shark Tank' Don't Always Come to Pass What looks like a deal is really a starting point for discussion when the show is over.

By Jeremy Miller

Opinions expressed by Entrepreneur contributors are their own.

Eric McCandless | ABC | Getty Images

Shark Tank makes for good TV. It's easy to get sucked into the drama of a hopeful entrepreneur versus a panel of sophisticated sharks. It's tempting to root for the entrepreneur, nervously making the pitch of their lives that could launch a fledgling business into the stratosphere. Since a train wreck unfolding before our eyes is nearly irresistible too, we also watch to see which hapless entrepreneurs flub the pitch and are left to take that long walk, head down and alone, toward the exit.

However, regardless of how authentic the sharks seem during the broadcast, I often wonder if they aren't more like minnows that may just disappear into thin air after the taping of the show. Here's why:

First, as an entrepreneur who has raised five rounds of capital, I know the devil is in the details when it comes to deal making. I know the key to a deal is not only in its valuation; an investor who owns 30 percent of your company on paper can actually own far more when deal terms like liquidation preferences, interest rates convertible into stock and even redemption rights which allow a VC to sell their stake at any time are thrown into the mix. There are no deals so simple and straightforward that they can be sealed with a handshake after the initial pitch.

Of course, Shark Tank wouldn't be good TV if the entrepreneur had to sit down on air through a mountain of paperwork, as I have had to do in real life to carefully evaluate each deal. As this detailed slog through complex deal terms lies at the heart of deal making, we should think of Shark Tank more like a game show than an hour of reality TV.

Related: Why Walking Away From Offers on 'Shark Tank' Was a Great Decision for These 3 Entrepreneurs

And since we all know that paperwork is the behind-the-scenes necessity to getting your investment, some -- I can't know the precise percentage -- of the deals struck on air don't actually happen. I personally know two entrepreneurs who have made deals with the sharks only to find that the deal they made disappears or the show never airs. Or both! After all the euphoria of sealing the deal in front of millions, the sharks have been known to walk away from the deal later, never giving the money they promised.

Indeed, the two fellow founders I know who want to remain anonymous (each show participant signs an NDA that could result in $5 million in damages per violation) recently told me that it's dangerous to bank on Shark Tank deals coming to fruition. One founder made a deal with one shark that never transpired and never aired, while another one did a deal on-air but later saw the shark back out. (Editor's note: Entrepreneur has contacted both unnamed founders to confirm their identities and has agreed to keep those confidential.)

Related: How to Win on "Shark Tank"

Budding entrepreneurs are hopeful that their appearances would be worth millions in marketing spend. But my friend's experience is a warning to not bank on the deals coming to fruition. A Forbes analysis found that 73 percent of business owners who made a deal on Shark Tank did not get the exact deal they made on TV. Nearly half of the business owners interviewed for the story said their deals never materialized. Another 30 percent said the equity and investment amount offered during the show changed after the cameras were turned off.

So, is it time to start calling Shark Tank a game show rather than reality TV?

If we think of Shark Tank as a game show, everything would be much less authentic. When an entrepreneur (contestant) makes a great pitch and gets a deal (wins), then the shark or the show should invest (give) the money, making a simple deal for common stock at a percentage of the company. Entrepreneurs with winning pitches deserve to get the deal they strike on air.

If Shark Tank is a reality TV show, then the broadcast needs to show you the reality of the situation! Don't end each week by tying a deal up in a neat little package sealed with a handshake. A reality show wouldn't sugarcoat the endless hours of research and negotiation. It wouldn't downplay the hard work and occasional pain that accompanies a round of financing.

Following an entrepreneur through the joy of successfully closing a round or the immense disappointment of an investor's withdrawal would be great TV too. There's real drama created when a company is crushed after counting on the money and the free marketing to launch their business, instead having to return to bootstrapping after months of surge planning based on the mistaken belief the deal would close. It would be very, well, real.

Related: 13 Million-Dollar Businesses That Turned Down 'Shark Tank' Deals

I see why people love Shark Tank but knowing the actual fate of some of the entrepreneurs who've appeared on the show makes it hard for me to watch. The reality of finding the right investors to grow your business is a supreme challenge for most entrepreneurs that bears no resemblance to a short, dramatic game show.

Shark Tank just needs to decide what it wants to be. If the sharks make a promise on air, then they shouldn't scatter like minnows when the lights go down.

Jeremy Miller

CEO & Founder, FSAstore.com/HSAstore.com

Jeremy Miller is the founder and CEO of FSAstore.com and HSAstore.com, the web’s first ecommerce destinations stocked exclusively with thousands of FSA- and HSA-eligible medical products available for purchase with tax-free funds for the more than 50 million Americans with these accounts.

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