Four Tips to Succeeding With the Sharks

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The VerbalizeIt team on ABC’s Shark Tank

About a year ago, my co-founder Kunal Sarda, WG’12, and I received the once-in-a-lifetime opportunity to pitch our business to seasoned investors on the popular ABC reality TV show Shark Tank, thanks to an application notification from the Wharton Venture Initiation Program. We knew that if we wanted the Sharks to fund VerbalizeIt, a language translation community that offers users real-time access to human translators, we would have one chance to deliver a succinct pitch and negotiate for seed funding in front of 7 million viewers.

We spent weeks (or, more accurately, months) preparing for our negotiation, and we are pleased to report that our hard work paid off. We generated a bidding war among the Sharks and successfully negotiated a funding offer. (Editor’s note: The episode aired this past Friday, May 17,  but you can watch a recording of Shark Tank Episode 26 on VerbalizeIt’s website.)

Since the show, we’ve negotiated with several more investors. Below are the strategies that helped us raise $1.5 million in investment capital with the right mix of investors.

We asked questions to understand what was important to each investor. Before the negotiations, we researched their past investments and interests. We looked at past comments made by the Sharks and talked to people who have worked with them so we could understand what factors made a deal attractive. Our goal was to discern how we could be flexible on the terms that the Sharks cared about, while avoiding giving up too much of the things we strongly valued.

We determined the least we would accept and were prepared to walk away. Kunal and I are both confident that travelers and small business owners would be excited about our business, but it was tough to ascribe a value to a market that has never been served before. In the end, we tried to make conservative estimates of our growth potential and agreed on a baseline valuation for our company.

We tried not to focus solely on the money. In case we received competing offers, we evaluated the non-monetary assets each investor could add, such as areas of expertise, business contacts and specific skills. This was a crucial step because we ultimately had to choose between offers from two different Sharks within a matter of minutes. Even when time is less crunched, we have found it easier to rationally evaluate non-monetary factors before getting into the heat of the negotiation.

We learned to control our emotions. We knew it would be difficult to contain our emotions when the cameras started rolling, but we understood that failing to maintain our composure would cost us. The only effective approach for improving our emotional control was practice, practice and more practice. We called on many of our Wharton friends for mock negotiations, and while we’re still working on this aspect, we felt that the practice significantly improved our mental readiness for negotiation.

 

  • http://twitter.com/SharkTankPdCast TJ Hale

    Ryan, you were both excellent on the show. best of Luck to you both in the future. I am going to reach out to you both (whenever your website recovers from the shark tank tsunami) to tell your story on the SharkTank Podcast.

    TJ
    Sharktankpodcast

  • Bikeman48088

    Did you ultimately close a deal with Mr. Wonderful?

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