Shark Tank is an unsolicited American venture capital pitching reality show. Investors, also known as "Sharks", invest in early or new business ideas in form of equity, venture debt, loan, and royalty. The entire process of pitching the idea, brainstorming, negotiating and finally closing the deal is aired on television. With over $63 Million invested by the Sharks till date, this serial becomes an imperative for aspiring entrepreneurs as well as serial investors.
There is a reason why programs such as Shark Tank are amazingly popular in developed countries. Be it Britain, Australia or the United States of America, there are something strikingly common among these countries and these factors make such a program, a success in terms of actually helping nascent businesses and not just another reality television show.
The following summarizes why India cannot sustain such a program.
1) Tangible Innovations - Best pitches in Shark Tank has been about an innovative product which either ramifies existing products or solve a new problem altogether. About 80% of the pitches include products and not services. Products which can be demonstrated on QVC, sold online, licensed or created as a brand on its own, rules the roost. Indian startups are devoid of the aspect. Most of these startup businesses are service orientated and hence require a greater understanding by any investor in comparison to any tangible product. Investing in such startups requires an in-dept understanding of the financials and valuations, which may dampen the ‘snappy and swiftness of decision’ concept of Shark Tank.
2) The imperative proprietary Laws - Investors in Shark Tank seek patents (utility and concept), copyrights and trademarks on products, productions, and brands respectively. This is because, proprietary laws actually provide protections to such innovators, and the entire Judicial structure is very serious about intellectual properties rights of citizens. Unlike their laws, the loopholes in Indian laws and the complex and slow judicial decisions gives no safeguards to innovators. Local and regional unaccounted counterfeiting by small businesses dissolves the purpose of having anything proprietary.
3) Economics of profit generation - Time and again, we have studied that the sole motive of any business is to gain a minimum profit for the continuous survival of the organization. Startups in India seem have forgotten this Rule 101 of any business and have diverged into an interpolation of the business model. Startups stress less on unit economics and more of trial and error methods, burning millions of dollars in customer acquisition. They rely on the basic principle of making a user addicted to the services provided by the startup in the short-run, becoming nonchalant to the future outcome. On the contrary, investors in Shark Tank delve deep into the per unit profit of the product and then extrapolate the expansion capacity of the startup.
4) Shrewd Investor Outlook - Investors in India have switched to a myopic view of an investment in a Startup Business. Investors have lost the sole purpose a “venture capital investment”, which was to mentor, incubate and run the race along with the founders of the business. It has become more of a portfolio game, where every investor with money wants a different kind of Business models in their portfolio of investments so that they may not miss out of anything big or as Mark Cuban says, "Fear of Missing Out (FOMO)". Experience, connections, and incubation, which is why people seek Shark Tank, are losing importance in India. Investors bet more on the idea than the business model.
A television show like Shark Tank, will merely resemble any other reality show in India with a little significance of actually helping young and new businesses.