Reality shows like Shark Tank have revolutionized the startup ecosystem, giving entrepreneurs a once-in-a-lifetime opportunity to pitch their ideas to seasoned investors. While the show offers visibility and potential funding, the journey from handshake deals to actual success is anything but straightforward.
This article breaks down the failure rates of startups featured on Shark Tank in the US and India, exploring key challenges entrepreneurs face, especially during the due diligence process.
In the meantime, you can also read our feature on why loss making startups are heading for IPO in India. It’s an interesting read too.
Key startup failure statistics from Shark Tank: USA vs. India
Shark Tank US: A closer look
- Overall failure rate: According to Failory, only 6% of companies featured between Seasons 5 and 9 have shut down—a surprisingly low rate compared to the general startup landscape, where up to 90% eventually fail.
- Profitability issues: About 20% of these companies struggled to turn a profit after appearing on the show.
- Post-show deal completion: Around 60% of deals made on-air actually close after the due diligence process.
Shark Tank India: The reality of startup deals
- Deal completion timeline: Startups in India often wait between 3 to 9 months for deals to finalize, largely due to extensive paperwork and legal procedures.
- Completion ratio: In Season 1 of Shark Tank India, about 66% of deals were successfully completed. The data for Season 2 is still unfolding.
- Major roadblocks: Many deals fall apart due to concerns raised during due diligence, founders rethinking their decisions, or failure to meet investor expectations.
US vs. India: How do failure rates compare?
| Aspect | US Shark Tank | Indian Shark Tank |
| Overall failure ate | 6% of startups shut down | Not explicitly stated |
| Profitability issues | 20% struggle to make a profit | Not explicitly stated |
| Deal completion ratio | ~60% | 66% for Season 1 |
| Due diligence challenges | Fewer reported issues | Significant delays & paperwork |
What entrepreneurs are saying: Insights from online media
Discussions across YouTube and online forums show mixed reviews from entrepreneurs who’ve been on Shark Tank. Many emphasize that the show provides incredible exposure, but navigating investor expectations and legal complexities is far tougher than what’s shown on TV. The due diligence process, in particular, is a major hurdle, often leading to delays or failed deals.
Why do startups fail during Shark Tank’s due diligence process?
Common pitfalls that lead to deal breakdowns
- Inadequate preparation – Entrepreneurs often lack well-documented financial records, business plans, or market research, making investors hesitant.
- Unrealistic valuations – Inflated valuations scare off investors who expect realistic numbers based on market trends and financial projections.
- Weak business models – If a startup lacks scalability or a clear revenue strategy, it raises red flags.
- Poor market understanding – Failing to demonstrate demand and customer insights can be a dealbreaker.
- Financial concerns – High burn rates, unsustainable debt, and unclear revenue streams deter investors.
- Lack of communication – Weak post-show engagement with investors leads to broken deals.
- Disagreements over business direction – Startups and investors must align on the company’s vision; otherwise, deals fall apart.
- Failure to address investor concerns – Entrepreneurs who dismiss investor feedback risk losing credibility.
- Legal issues – Problems like ownership disputes or unresolved liabilities scare away investors.
- Product development mistakes – Lack of testing and validation can result in products that fail to meet market expectations.
Challenges unique to startups on Shark Tank India
- Long due diligence timelines – Unlike the fast-paced decisions on TV, the actual investment process in India takes 3 to 6 months, leaving startups in financial limbo.
- Misleading information – If investors uncover inconsistencies in financials or claims, deals collapse.
- Governance & compliance issues – Improper legal structures can prevent investments from materializing.
- Mismatch between expectations & reality – Many founders expect quick investments, but real negotiations are complex.
- Investor commitment concerns – Reports show that out of 65 promised investments, only 27 were actually fulfilled.
- Negotiation difficulties – Some entrepreneurs back out post-show, seeking better offers elsewhere.
- Legal & financial red flags – Unclear financial records or undisclosed liabilities lead to investor withdrawals.
- Media-driven pressure – The dramatic portrayal of pitches creates unrealistic expectations for deal finalization.
- Lack of transparency – Growing concerns exist over whether all promised investments are genuinely honored.
- Cultural & market differences – India’s startup ecosystem is still evolving, which affects investor confidence and decision-making.
What can entrepreneurs learn from this data and input?
While Shark Tank serves as a powerful launchpad for startups, its reality differs greatly from the television portrayal. The US version sees a smoother due diligence process with higher deal closure rates, whereas Indian startups face longer delays and regulatory complexities. Regardless of location, entrepreneurs must be well-prepared, transparent, and adaptable to survive the scrutiny of investors.
To improve their chances, founders should:
- Conduct thorough financial planning and ensure records are transparent.
- Set realistic valuations that align with market expectations.
- Develop a scalable and profitable business model with clear revenue projections.
- Be open to investor feedback and flexible with negotiations.
- Communicate effectively to build trust throughout the investment process.
By addressing these challenges proactively, startups can turn their Shark Tank experience into a genuine stepping stone for long-term success, rather than just a fleeting moment in the spotlight.
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