Shark Tank Failures: The Surprising Truth Behind Rejected Deals That Made Millions

The failure rate of Shark Tank businesses is nowhere near what you'd expect from typical startups. Most new businesses have a scary 70% chance of failing. The companies that make it to ABC's hit show only see a 6% failure rate. This huge gap caught me off guard when I first learned about it.

The show boasts great numbers, but some failed deals serve as warnings to others. ToyGaroo went bankrupt and Breathometer ran into FTC problems - these major flops teach important business lessons. The sort of thing I love is seeing the other side - rejected entrepreneurs who built massive companies anyway. To cite an instance, DoorBot (now Ring) said no to a $700,000 offer and Amazon bought them later for over $1 billion. These wins and losses are a great way to get business wisdom for any entrepreneur.

This piece dives into deals that fell apart after getting shark money and pitches that took off without it. We'll get into what didn't work, what clicked, and the lessons from these unexpected business stories.

The Reality of Shark Tank Failures

Behind the handshakes and dramatic deals on TV lies a complex story about shark tank failures that most viewers don't fully grasp. The cameras stop rolling, and the difference between TV agreements and ground business outcomes becomes clear.

Not All Deals Are Created Equal

Those handshake deals you see on TV often change drastically—or fall apart completely. A full picture shows about 50% of on-camera deals never make it past the filming stage. Research into 237 businesses from the first seven seasons revealed that 73% didn't get the exact deal they shook on during their episode. About 43% of deals fell through during negotiations, and 30% moved forward with different terms.

Due diligence stands as the biggest problem. Sharks start scrutinizing company financials, intellectual property, and operational metrics. The glossy TV version fades away to reveal harder business truths. Mark Cuban changes his on-air agreements only 25% of the time—by a lot less than other Sharks.

Why Failure on Shark Tank Is Different from Startup Failure

The startup world faces tough odds—80% fail within five years. Shark Tank tells a different story. Among participants from seasons 5 through 9, all but one of these companies stayed in business. On top of that, 20% weren't profitable but kept their doors open.

This soaring win rate of 94% shows how the Shark Tank experience stands apart from typical entrepreneurship. Rejected companies often thrive after their appearance. Beard King's story proves this point—they lost their deal but saw sales explode to $1.6 million the year after airing.

The Role of TV vs. Real Business Needs

Shark Tank juggles two competing needs: making great TV and securing solid investments. Quick-fire negotiations and dramatic showdowns make great television but don't reflect how business deals actually work.

Traditional investment processes need several meetings instead of one dramatic pitch. More than that, the show favors consumer products that look good on camera, unlike many successful but visually bland B2B solutions.

Smart entrepreneurs see the show as their chance to market themselves. Each episode pulls in over 5 million viewers. The "Shark Tank Effect" can boost sales through the roof, whatever the deal's outcome. One entrepreneur put it simply: "Whatever you get the deal or not, there are many success stories".

Shark Tank Deals That Failed After Investment

Some shark tank failures are a great way to get business lessons, especially when deals looked promising at first. These stories show how even successful pitches can fall apart after the show ends.

ToyGaroo – Scaling Too Soon

This "Netflix for toys" company got $200,000 from Mark Cuban and Kevin O'Leary for 40% equity. The business started well but ended up failing because of two major problems: inventory and shipping costs. The team couldn't buy toys cheaply and had to get them from retail stores since wholesale prices were higher. Their free shipping model became too expensive because children's toys came in different sizes.

Cuban's team wouldn't let them change the shipping strategy when the founders wanted to. The pressure to "grow grow grow" became overwhelming while basic problems went unsolved.

Breathometer – A Public Safety Risk

Charles Michael Yim's smartphone breathalyzer got all five Sharks excited in 2013. They invested $1 million for a 30% stake together. This rare group investment turned into a disaster when the Federal Trade Commission found the device showed lower blood alcohol levels than actual.

The FTC said Breathometer "lacked scientific evidence to back up their advertising claims" and made them give $5.1 million in refunds. Mark Cuban later called this his "biggest beating" and noted the founder seemed busy traveling to exotic places instead of working.

Sweet Ballz – Internal Conflict

Cake ball creators James McDonald and Cole Egger got $250,000 from Mark Cuban and Barbara Corcoran, but their partnership fell apart fast. McDonald sued Egger just days after their episode aired. He claimed his partner had created a competing product and hijacked their website traffic. Their fight killed any chance of success after the show.

Body Jac – A Product with No Market

Fitness entrepreneur Cactus Jack Barringer convinced Barbara Corcoran and Kevin Harrington to put in $180,000 for 50% equity. Barbara added one condition - Barringer needed to lose 30 pounds to prove the product worked. He lost the weight, but nobody wanted to buy the product. Barbara later said this was her "worst business deal".

ShowNo Towels – Investor Fallout

Shelly Ehler's poncho-style towel seemed like a winner after Lori Greiner invested $75,000 for 25%. The relationship went bad right away. Disney put the product in their water parks briefly but never ordered again. Ehler closed shop and became a hypnotherapist instead.

Rejected Deals That Became Multi-Million Dollar Brands

Every shark tank failure has a flip side - rejected entrepreneurs who built empires without the Sharks' help. These stories teach us the most inspiring business lessons about never giving up.

Ring (DoorBot) – The Biggest Miss in Shark Tank History

Jamie Siminoff pitched DoorBot on Shark Tank in 2013. His WiFi-enabled video doorbell already made $1 million in annual sales. He asked for $700,000 for 10% equity but left with nothing. Kevin O'Leary made an offer that Siminoff couldn't accept. "I remember after that 'Shark Tank' episode literally being in tears," Siminoff later shared.

The TV exposure turned out to be a great opportunity. Sales jumped to $3 million within a year after the episode aired. The company rebranded as Ring and got investment from Richard Branson. They expanded to over 16,000 retail stores. Amazon bought Ring for about $1 billion in 2018. This became the most expensive missed chance in Shark Tank history.

Coffee Meets Bagel – Turning Down $30M

The dating app world changed when sisters Dawoon, Arum, and Soo Kang surprised everyone. They said no to Mark Cuban's $30 million offer - the biggest in show history. "We see this business growing as big as Match.com," Arum said confidently. Match was already becoming a billion-dollar company.

They made the right call. Coffee Meets Bagel raised nearly $20 million by 2018. Dawoon Kang believes their decision paid off, especially as other dating apps struggled with "swipe fatigue".

Chef Big Shake – A Food Innovation That Took Off

Shawn "Chef Big Shake" Davis wanted $200,000 for 25% of his Shrimp Burger company. After the Sharks said no, Davis stayed positive saying "everything happens for a reason". The show caught other investors' attention. He got $500,000 for 30% equity - better than what he asked from the Sharks.

CBS Foods started with just $30,000 in yearly sales. Sales shot up 300% in three months after the show and reached $5.5 million annually. Mark Cuban later admitted he should have invested.

The Lip Bar – A Beauty Brand That Found Its Voice

Melissa Butler's vegan lipstick line faced harsh criticism in 2015. Kevin O'Leary didn't hold back: "The chances that this is a business are practically zero". Daymond John added, "You are never going to create anything new in this world".

They couldn't have been more wrong. The Lip Bar landed in 142 Target stores by 2018 and grew to 1,000 retail spots including Walmart and Meijer. The company raised $6.7 million in 2022 with yearly revenue over $1 million. Butler's story shows that rejection often leads to better paths.

Lessons from Shark Tank Successes and Failures

Shark Tank successes and failures teach universal business lessons that entrepreneurs can learn from. These stories showcase patterns through dramatic meltdowns and billion-dollar misses. Every business owner should pay attention to these valuable insights.

Exposure Can Be More Valuable Than Investment

Shark Tank appearances give companies about $9 million worth of marketing exposure. Companies don't even need to close a deal to benefit from this publicity boost. Most businesses see their revenue multiply 10-20 times after their episodes air.

Take James Siminoff's Ring (formerly DoorBot) story - he used his rejection to stimulate growth by improving his product and fixing the issues Sharks pointed out.

Founders Must Know Their Worth

Coffee Meets Bagel made headlines when they turned down Mark Cuban's $30 million offer. They raised $11.2 million in venture capital on their own terms instead. The Bouqs

Company took a similar path and ended up raising substantial capital elsewhere. These founders knew that a company's value was just one part of the bigger investment picture.

Investor Fit Matters More Than Money

Sharks put their money on people, not just ideas. Barbara Corcoran's investment philosophy is simple: "Would I trust this entrepreneur with my kid when he was young?". Finding investors who understand your industry are a great way to get more than just funding. Mark Cuban puts it this way: "I look at it as experience. Intuition comes from experience".

Execution Is Everything

Shark Robert Herjavec believes that "The businesses that do well are the people who have the stamina to get back up after a hardship". He stresses that ideas mean nothing without proper execution: "A million-dollar idea is worthless without investing the time and effort required to bring it to life".

Rejection Isn't the End

Of course, many entrepreneurs thrive through other investors or by bootstrapping after getting rejected. The show's deals change substantially after airing 73% of the time, and all but one of these deals never happen 43% of the time. All the same, many rejected companies turn this into an advantage. They focus on what customers need and how they fit in the market, and they succeed without Shark money.

Conclusion

Shark Tank's failures and successes paint a fascinating story about entrepreneurship that goes way beyond the reach and influence of television entertainment. The show proves that marketplace success often follows apparent failure, while some celebrated deals fall apart under ground pressures. The "Shark Tank Effect" changes businesses whatever the investment outcome.

Ring, Coffee Meets Bagel, and The Lip Bar's stories prove that rejection can become the greatest gift. ToyGaroo and Breathometer show that even Shark backing doesn't guarantee success. The show boasts an impressive 94% success rate compared to typical startup failures, yet the journey after the show rarely follows a predictable path.

These examples highlight some key lessons. Exposure brings more value than investment dollars. A founder's resilience matters more than their original pitch. The right investor fit means more than grabbing any deal. Execution after the cameras stop rolling determines a company's destiny.

These lessons are a great way to get insights to aspiring entrepreneurs who watch the show. The show serves as a condensed business education rather than pure entertainment. The dramatic successes and unexpected failures create a roadmap of pitfalls to dodge and opportunities to grab. Success comes from what entrepreneurs build afterward—with or without Shark money.

FAQs

Q1. What percentage of Shark Tank deals actually close after the show?

Approximately 50% of deals made on camera don't finalize after filming. About 43% fall through during negotiations, while 30% proceed with modified terms.

Q2. How does the success rate of Shark Tank businesses compare to typical startups? Shark Tank businesses have a remarkable 94% success rate, with only 6% going out of business. This is significantly better than the typical startup world, where about 80% of new businesses fail within five years.

Q3. What was the biggest missed opportunity in Shark Tank history?

Ring (formerly DoorBot) is considered the biggest miss. After being rejected on the show, the company was later acquired by Amazon for approximately $1 billion.

Q4. Do entrepreneurs benefit from appearing on Shark Tank even if they don't get a deal?

Yes, appearing on Shark Tank provides about $9 million worth of marketing exposure. Many companies experience 10-20 times revenue increases after their episodes air, regardless of whether they secure a deal.

Q5. What's the most important factor for success after Shark Tank?

Execution after the show is crucial. The businesses that do well are those run by entrepreneurs who have the stamina to persevere through hardships and effectively bring their ideas to life, regardless of whether they received an investment from the Sharks.