We’d previously discussed whether reality TV show Shark Tank which has entrepreneurs pitching angel investors was a realistic depiction of how venture capitalist and angel investor interactions occur in real life (Is Shark Tank TV realistic?). We’d highlighted the fact that Shark Tank investors make decisions much quicker than investors in real life, but we did fail to mention that even though they make decisions quickly on the show, the offers are not binding it seems until due diligence occurs. Investing any amount of money with no due diligence would be foolish on the part of an investor no matter how wealthy as they need to understand your company and verify the veracity of your claims (patents, revenues, number of customers, etc).
And from an entrepreneurs perspective, a deal is not done until the ink dries on the papers both in real life and on the Shark Tank. It appears that ModMom, a furniture company, which appeared on Shark Tank and received an investment offer from Robert Herjavec actually went onto raise money from other angel investors based on this blog post they’d written. So while we don’t understand the intricacies and conditions of investment offers on the Shark Tank, it appears that just like in real life, an investment is not made until the due diligence is done, deal terms are agreed upon and both the entrepreneur and investor aka Shark sign on the proverbial dotted line.
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