SUMMARY
Many participants of Shark Tank India told Inc42 that the Sharks have deliberately delayed investments under various pretexts
Founders have alleged the Sharks of being impolite in person and deriding their business models after promising investments on air
In the absence of documentation or agreements of the deals, the troubled participants may find it difficult to seek a legal recourse
Shraddha and Mohit (names changed) always had a penchant for building startups. The couple from a tier II city had experimented with a few ideas before zeroing in on the beauty industry in 2021. Their idea was to introduce reasonably priced beauty tools for the price-sensitive Indian customer.
In 2022, the duo found the perfect platform to pitch this business idea — Shark Tank India. Their goal was to raise more than INR 50 Lakh for a certain percentage of equity in their startup. Their pitch showed how their venture had achieved scale after product testing and garnered promising sales on multiple ecommerce platforms. As expected, the Sharks were impressed.
At least four of the five Sharks on the show told Shraddha and Mohit that their business had potential and that they were ready to invest. Two of the Sharks committed a joint investment, arrived at a valuation and even wrote a cheque in their favour.
Interestingly, one year down the line, there’s no funding, and all they have is an unmet, on-air commitment from Sharks to invest in their business. Months of preparation for Shark Tank India and the subsequent wait for funding have cost them dearly, the duo told Inc42.
Notwithstanding the Shark Tank spotlight, the lack of funding halted new product launches, and while they appeared on various local TV shows post their Shark Tank experience, the whole episode is proving to be a damp squib.
Similar has been the fate of many others, who are waiting for the Sharks to adhere to their commitments, but, so far, to no avail.
In the past few weeks, many Shark Tank India Season 1 and 2 participants told us that the Sharks have been deliberately delaying investments under various pretexts. A WhatsApp group made by these participants, which Inc42 was also given access to, testifies their sorry state.
Meanwhile, Sony Entertainment Television, which hosts the show, claims that the high-profile entrepreneurs (Sharks) collectively invested INR 123 Cr (both Season 1 and 2) in various businesses. However, sources claim that only 20% of the total commitments have materialised so far, while the Sharks happily cashed in on the glitz offered by the reality TV show.
Not to mention, the very foundation on which the show garnered publicity — to provide a platform to entrepreneurs who struggle to raise initial money for their ventures — seems to be weak.
Social media platforms have been inundated with posts from several participants of Shark Tank India, expressing the detrimental effects of the prolonged delay on their business.
Inc42 conducted interviews with more than a dozen startup founders for this article. As requested, we have chosen not to disclose the names of these founders.
Commit, Ridicule And Ghost
It may sound absurd, but this is exactly how Vedika (name changed upon request), the CEO of a services company, described her journey of swimming with the Sharks.
Vedika, who had already secured some initial funding before being featured on Shark Tank India, witnessed a lot of enthusiasm from the Sharks as three of them agreed to invest in her startup.
Unfortunately, Vedika’s happiness was only short-lived. Two weeks after she received funding commitments, she was called by one of the Sharks to his office to discuss the further course of action.
“We did understand that we may have to pitch our business model and financials, and the Sharks would conduct due diligence. We also shared all the documents requested by one of the Sharks who has an office in Mumbai. After months of dilly-dallying, we were finally called to meet the Shark in Mumbai who outrightly called our business model flawed and said there was no market for the services we offer,” the contestant, who appeared on Shark Tank Season 2, said.
Vedika added that surprisingly the celebrity CEO, who appears to be very friendly on television, treated them rudely and made them feel that they should not even think of their venture, let alone investments.
“Not liking an idea is one thing, but being disrespectful is not justified. The Shark made us feel worthless and was extremely impolite. We were appalled by the Shark’s behaviour,” Vedika said.
Similar was the experience of Rohit Jain (name changed), who bagged instant support from one of the Sharks. However, things soon took an ugly turn.
“My venture was at the minimum viable product stage, and I needed some early funding to test the product in a few markets. Almost all the Sharks present on the show liked my idea, and I was able to bag a funding commitment from one of the sharks,” Jain told Inc42.
Jain received an INR 50 Lakh commitment from one of the judges against a certain equity in his venture. However, what followed next was an exchange of inflammatory emails between the Shark’s office executives and Jain, which resulted in the Shark and his office executives ghosting him.
“There were some responses I used to get earlier on due diligence. Then the Shark’s team even emailed a shareholding agreement to me. I signed the same and sent it back. Since then, they have stopped receiving calls and responding to emails. Further, meeting this Shark at his office in Mumbai only invited distress, loathe and self-doubt,” the participant said.
Inc42 also spoke with a team of cofounders who are pass-outs from India’s top engineering college and received an investment commitment from two judges for their venture. However, it has been more than a year since they have been chasing the Sharks for the same.
“We are tired of chasing them and have now started to focus on building our products. We are lucky that a lot of investors come to our college campuses and incubation centres to offer funding and mentoring,” the cofounders said.
A few participants mentioned that Sony TV crew members train participants on how to stage a perfect show.
“Before we appear on TV, we are trained for months to look interesting on TV. The participants who lack flamboyance do not get aired,” the founders said.
Is There A Legal Recourse?
Surprisingly, the entire process of Shark Tank India does not entail signing any legal documents from any parties involved, making it challenging for the participants to seek legal recourse.
Speaking with Inc42, a Delhi-based corporate lawyer said that although the video clips, which have been aired and are present on Shark Tank India’s website, make for evidence, the absence of a legal contract or an agreement works in favour of the Sharks.
Another challenge that these participants are facing is Sony Television’s lack of involvement in making sure that the promised investments are made in a timely fashion once an episode gets aired.
“They won’t even react to your questions after the broadcast because they work closely with the Sharks,” one Shark Tank India winner quoted above said.
Another participant said that Sony Entertainment Television only communicates with contestants via phone or emails, which again cannot be contested in the court of law.
In addition, Sony TV only assures of providing a platform, and there are no terms and conditions to protect our interest if judges renege on their pledge.
“There are only verbal assurances from judges and nothing in black and white until due diligence is completed and a term sheet or a shareholding agreement is signed by both parties. Sharks play this game very smartly,” a participant said.
Besides, a majority of Shark Tank India winners are young entrepreneurs, who claim that fighting the big-shot entrepreneurs will cost them a fortune.
Inc42 also sent a detailed questionnaire to Sony Entertainment Television Limited, requesting its stance on investment delays and their alleged minimal involvement in addressing the participants’ issues. We did not receive any response from Sony TV until the time of publishing this story. The article will be updated once the broadcaster responds.
Sources added that many commitments made by the Sharks were not even aired due to various reasons. In such a scenario, the participants are left with little evidence to have a strong case.
Indian Sharks Can Definitely Do Better Than This
India’s startup journey has been fabulous for the past several years, with the country emerging as the third largest startup ecosystem globally — although many argue this growth story has come mostly from India’s metros and cosmopolitan cities.
Notably, the focus is slowly shifting towards the country’s hinterland, tier II towns and beyond, where the younger generation is spearheading innovative endeavours and combining them with the growing digital adoption.
At this crucial juncture, the next wave of startup growth story in India is likely to emanate from its small towns, where aspiring entrepreneurs are keen to move away from conventional government and corporate jobs and embark on their entrepreneurial journey.
Therefore, in addition to garnering support from the government and large corporates, these entrepreneurs seek handholding and financial aid from those who have been at the forefront of the first wave of startup growth in India.
Akshay Shah, the founder and CEO of vertical SaaS company with a student discovery platform, iWebTechno whose winning pitch was not even aired during Shark Tank Season 1, said that his research over the last couple of years revealed that even in developed economies like the US, more than 60% of the Shark Tank deals that are committed on TV do not materialise.
However, the difference lies in the fact that young entrepreneurs are not made to wait for months or years.
“It is either a Yes or a No. No in-betweens or prolonged delays like India,” he added.
Shah, who is also putting together a forum of all the Shark Tank India Season 1 and 2 winners who have yet to receive the promised funding, pointed out that in mature startup economies, investors or Sharks are willing to forego their profits, take risks by betting on very young startups, and provide mentorship to help them scale their ideas.
On the contrary, in India, Sharks have been very defensive when it comes to investing, even after commitments and sometimes post the due diligence processes. They are reluctant to engage in the long-waiting game of supporting the growth of a fledgling business.
“Unfortunately, some of these successful and bright entrepreneurs of India, who are now the CEOs of billion-dollar companies, have forgotten that they also have similar origins and needed support to grow,” Shah added.
A young woman entrepreneur, who is now seeking alternative investments after waiting for the Sharks to release funding, expressed her concerns. She mentioned that even new investors are hesitant to invest in ventures that have not received funding from the Sharks, suspecting flaws in the business models.
“If the Sharks have not followed up on their words, why would an average investor be confident about our business? The least we expect from the Sharks is mentorship and network opportunities, even if they have failed to keep their promises,” she said.
The allegations from these founders come at a crucial juncture when entrepreneurship in the country is undergoing a significant transformation. On one hand, we witness the government’s strong support through initiatives like Startup India, while on the other hand, Shark Tank India, too, has served as a profound source of inspiration for countless individuals embarking on their entrepreneurial ventures.
Despite receiving love and support across the nation, the emergence of such allegations have the potential to dampen people’s sentiment. Nevertheless, considering the current circumstances, it is unlikely that anyone would willingly subject themselves to the arduous experiences endured by some participants of Shark Tank India.
[Edited by Shishir Parasher]
