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Shark Tank Failures: 10 Massive Fails & 8 Huge Misses
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
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, deals with Disney and Franco Manufacturing failed due to low sales and profit margins. These setbacks and ongoing tensions led to the business's end.
Years later, Shelly revived ShowNo Towels, now targeting the underserved market of people with disabilities, a group Greiner had overlooked.
3) Sweet Ballz
What was Sweet Ballz: Maker of cake balls retailing at convenience stores
Sweet Ballz’sfounders: James McDonald and Cole Egger
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)
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)
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.
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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
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
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.
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:
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
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.
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.
5) Proof Eyewear
What is Proof Eyewear: An eyewear company that makes glasses out of wood and recycled sustainable materials.
Proof Eyewear's founders: Taylor, Brooks, and Tanner Dame (brothers)
The Dame brothers came into Shark Tank having already made an impressive $433,000 in sales of their sustainable glasses, made from recycled materials such as plant-based plastics and old skateboard decks.
Kevin O’Leary was impressed with their business and made an offer of $150,000, but for a 25% stake and a $2.50 royalty payment on every pair of glasses sold until his investment was repaid, after which the royalty payments would go down to $1.
Robert Herjavec then offered the brothers the same deal, but minus the royalties. After some deliberation, the brothers returned with a counteroffer of 20% equity for $200,000, but none of the Sharks took the offer and Proof Eywear’s founders walked away without a deal.
It’s too bad for the Sharks, because Proof Eyewear is still in business and is now doing an estimated $6 million in annual sales.
6) Xero Shoes
What is Xero Shoes: Minimalist, Huarache-style sandals
Xero Shoes's founders: Steven Sashen and Lena Phoenix
At the time of the company’s appearance on Shark Tank, Xero Shoes had already done $650,000 in sales over two years. Co-founder Steven Sashen stated that they were on track to hit $1.2 million in 2012.
While some of the Sharks were worried about the simplicity of the product and felt it was too easy to knock off, Mr. Wonderful offered the co-founders $400,000 for 50% equity.
Sashen and Phoenix didn’t want to give up so much of their business, so they turned down the deal.
However, the Xero Shoes segment on Shark Tank attracted the interest of customers and private equity investors alike, and the business has since enjoyed major success.
Xero Shoes even sponsored the US synchronized swim and archery teams during the 2021 Summer Olympics in Tokyo.
As of 2022, Xero Shoes has an annual revenue of $23 million and is expanding their product line outside of the original sandals.
7) HillBilly Brand
What is HillBilly Brand: A line of country-style clothing, such as T-shirts, trucker hats, and a range of outdoor apparel.
HillBilly Brand's founders: Mike Abbaticchio and Shon Lees
HillBilly Brand at Shark Tank: Season 2, Episode 4
Ask: $50,000 for 25% equity
HillBilly Brand’s co-founders came onto Shark Tank seeking a modest investment of $50,000 for a 25% stake in their redneck-inspired country clothing company.
They didn’t get what they asked for, but ended up walking away with an agreement to sell the whole company to three of the Sharks, in exchange for $75,000 and 7% royalties.
But, as many Shark Tank deals do, the deal fell through during post-show negotiations.
It seems to have worked out for the best for Mike Abbaticchio and Shon Lees, though, as their HillBilly Brand has now launched in new global markets and product categories.
HillBilly Brand is now earning at least $1 million in revenue annually.
8) The Lip Bar
What is The Lip Bar: Cruelty-freevegan lipstick made by a woman of color, for women of color.
The Lip Bar's founder: Melissa Butler
The Lip Bar at Shark Tank: Season 6, Episode 18
Ask: $125,000 for 20% equity
When The Lip Bar’s founder, Melissa Butler, came onto the Shark Tank asking for an investment of $125,000 in exchange for 20% equity, the Sharks had nothing but criticism for her and her vegan lipstick brand.
But this didn’t deter Butler, who knew that the Sharks just didn’t understand her customer base. So she pushed forward with her company, and The Lip Bar is now sold in 1,000+ stores across the United States, including in various Target and WalMart locations.
As recently as October, 2022, The Lip Bar raised $6.7 million in seed funding, which the company will use to expand even further.
The Lip Bar reportedly pulls in around $5.5 million in revenue annually, going to show that the Sharks missed out on yet another big investment opportunity for a great company that they didn’t share a vision with.
2 Important Points about Shark Tank
To further understand these Shark Tank failures, here are a couple of important things to consider:
Great business doesn’t necessarily mean great TV.
The show mostly deals with interesting direct to consumer mass-market products with the potential to appeal to a general audience. After all, the goal of the show is to maximize TV ratings, rather than the investment portfolio success of the sharks.
Participant businesses don’t necessarily chase the investment.
Getting exposed to more than 5 million viewers on national television for free is a great promotional opportunity regardless if your business requires funding or not.
A great example is Xeroshoes who turned down an offer to sell 50% of their equity to the sharks, which turned out to be the right decision because after the show their sales steadily rose to $2.5 million annually within a year.
Although this success doesn’t happen to every company (some participants say they’ve noticed only a slight, temporary increase in sales), it’s not that rare. Megan Cummins, owner of You Smell Soap, shares in an interview:
“Word of mouth has been phenomenal. Ever since the show, there has been a steady stream of orders. Major chains called up saying their stores were reporting lots of requests for us, Countless boutiques opened wholesale accounts, magazines started calling, blogs started posting - it was entirely worth it. It was the best investment I’ve ever made into the company. That amount of advertising would be nearly a $250k.”
Shark Tank Failure Rates
Those of you familiar with the startup world know that startup failure rates are abysmal - 2019 figures show approximately 11 out of 12 true startups fail (although failure rates are lower for non-innovative new businesses).
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%.
This means that failure for shark tank participants is the exception rather than the rule (as it is for most startups), which makes the cases we discuss below even more interesting.
Moreover, the low failure rates support the claim that the appearance on Shark Tank itself is very valuable for a new business, especially one selling consumer products.
Interesting S01-S10 Shark Tank Stats:
Total Pitches: 895
Total Deals: 499 (56% of contestants make a deal, 68% in season 10)
Total invested capital: $143.8m
Average deal amount: $286k
Average equity sold: 27% (the investment amount is rising, while the equity is falling with newer seasons)
The most common industries are food & beverage and fashion & beauty, but home & lifestyle are on the rise in later seasons.
The most active investor is Mark Cuban with 151 deals and $33.6m invested. This amounts to the lowest percentage out of his total net worth, however, at 1%.
With Shark Tank company failure rates as low as 6%, it’s a surprise the sharks don’t try to invest in every deal that comes their way and that they try to aggressively push the terms even after the cameras are off, which leads to many deals falling apart.
Maybe this realization is the reason why the last seasons are seeing more successful deals (68% (!) in season 10, compared to below 50% in early seasons) and much better conditions for the founders (average equity of 27%, which is still very high for the startup world, compared to close to 50% in the early seasons).
Simply investing in every deal that comes their way would have made the sharks richer than they are today (e.g. the DoorBot deal would have more than made up for the cost of all the unsuccessful investments). Investing in every deal, however, might not be the best decision for making the show more interesting and keeping its ratings high.
Common Questions
How many Shark Tank businesses have failed?
From the 210 companies that participated in Shark Tank in seasons 5 to 9, only 12 have failed.
What percent of Shark Tank companies fail?
Shark Tank's failure rate is around 6%, which is much lower than the estimated 70% business failure rate.
What Shark Tank deals have failed?
ToyGaroo, ShowNo Towels, Sweet Ballz, Body Jac, CATEapp, Breathometer and You Smell Soap are some of the companies that went through Shark Tank and later on shut down.
How many Shark Tank deals fall through?
In seasons 1 to 7, around 43% of the deals accepted on-air fell. 30% of them were tweaked and only 27% stayed the same.
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