Plan My Wedding Share 5 Fantastic Tips To Win Over The Shark...

Plan My Wedding Share 5 Fantastic Tips To Win Over The Shark Tank

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South Africa recently played host to the award winning reality TV show Shark Tank, which was aired on prime time on Mnet at 6pm every Sunday for the past 12 weeks.

In Shark Tank South Africa, entrepreneurs go up in front of a panel of esteemed successful South African business moguls, known as the “sharks”, who are willing to invest their own money and time in deserving and potentially lucrative business ideas.

The trick is in convincing these highly critical and experienced sharks that it will be worth their while to bankroll your business, product or invention.

Co-founders Jason Newmark and Chelsea Evans of Plan My Wedding, recently pitched their start-up business idea on the show. They were successful in securing a R400 000 investment, from Gil Oved (Co-founder and CEO of the Creative Counsel – South Africa’s largest marketing and advertising company with annual turnovers of R700 million rand and Dawn Nathan Jones (former CEO of Euro Car – leader of one of South Africa’s most successful car rental companies) for 25%  each equity stake in their business.

Related: The Shark Tank Investors On What Makes A Start-Up Investable

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The main 5 points we thought were very valid after watching other episodes and comparing it to our pitch. We would say these were the top 5 key notes that we still take note of today

1Valuation

Watch how the sharks deal with valuation. Every Shark Tank pitch starts with contestants asking for a specific amount of money in exchange for a specific percentage of ownership in their business.

This establishes their proposed valuation. So for example, if they want to give 10 percent of the company for R100 000, that’s a valuation of R1 million; and 30 percent for R150 000 is a valuation of R500 000. It’s simple math.

Investors like valuation to relate to your real business numbers, such as sales, gross margin (price less direct costs), and fixed costs. On the show, the sharks frequently object to unrealistically high valuations; sometimes they make their own offers based on much lower valuations.

That’s a simple matter of making offers and counter offers. Very rarely, they’ll accept a valuation based on the value of proprietary technology, or brand impact, aside from actual business numbers.

Because the Shark Tank is about television entertainment, it keeps valuation simple. Every start-up should understand the basics as it deals with potential investors.

2Market Size

The sharks want businesses that appeal to interesting numbers of possible buyers. They want interesting markets that can grow, not very focused niches that look like they’ll remain small forever.

3Defensibility

Sharks often ask: “What do you have that I can’t just do myself? I can take the money you want, hire some people, and become your competitor.” That’s about defensibility. The sharks want to invest in a company that isn’t going to be blown away by competition in the near future.

Defensibility comes in different ways for different businesses. Occasionally it’s a matter of a strong patent. More often, it’s secret formulas, secret ingredients, trade secrets, and relationships with channels of distribution. Sometimes it’s progress made in branding. Without defensibility, the investment is not attractive.

Related: Avoid These 7 Mistakes When Pitching to Big-Time VCs

4Scalability or Leverage

Scalability or leverage is easy to understand when you think about products compared to services. If you sell products it’s easy to imagine gearing up to make a whole lot more of them if sales grow. A product business is scalable. Some service businesses — Plan My Wedding Application is a great example — we are also scalable, even though we sell services.

It’s not a coincidence that very few of the Shark Tank contestants are selling services. Services are great for owner-operators, but not a great opportunity for investors.

In the first season on Shark Tank SA the sharks turned down highly qualified and educated entrepreneurs because it didn’t seem easy to scale up without them.

5Industry Bias

The sharks frequently prefer industries and businesses that match their experience and previous investments as well as the conscious belief and values.

Shark, Dawn Nathan Jones tends to like woman in businesses and supporting young entrepreneurs, Gil Oved would steer more towards the attitude of an individual over and above anything. Sharks are more likely to invest in types of business they know, and the contestants, when it turns out they have a choice, value certain sharks more for certain kinds of businesses

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