An Analysis of the Ethics behind Shark Tank, a Hit Reality TV Show

For this paper I will be discussing the ethics behind the hit reality TV show Shark Tank, one of my favorite shows. The show revolves around entrepreneurs and small business owners pitching their company or startup to a panel of investing magnates, Contestants attempt to acquire capital in exchange for an equity stake in their company. The amount of capital being sought has ranged anywhere from $10,000.00 to $1,000,000.00, and equity stakes offered vary, If one or more of the “sharks” dislikes the pitch, they can opt to be “out.

” The ethics behind this show pertain largely to the business world, although broader applications are also present. The two main sides I would like to examine are the ethics of the entrepreneurs and the ethics of the investors, Some of the facets I’d like to analyze are the presentation of one’s business (sales, operations, management, finance, etc.) in an honest and ethical way, the ethics behind the offers and counteroffers the “sharks,” or investors, make, and the ways in which the investors act in regards to each other.

The first side, the side of the entrepreneurs, can present a few different ethical scenarios and dilemmas. One problem on the show I have seen several times are entrepreneurs or small business owners either presenting their business in a misleading fashion or omitting important facts, For instance, even though a business owner may have high sales and revenue, that could also mean that they could have a lot of debt, something which would impact the offers made by one or more of the investors, and could even convince them to opt out of the investment opportunity, as too much debt is usually not a good sign.

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This problem is usually resolved by the sharks themselves, as they tend to ask very pointed questions. Another ethical scenario an entrepreneur may become involved in is the overuse of emotion in order to get a deal. While this does not always work with all of the investors, it can sometimes be effective with some of them. I think this is the wrong way to go about raising capital, as it may obscure the position the business is in, financial or otherwise.

This could come at the cost of an investor backing out of a completed deal once due diligence has been completed. It is ultimately better to rationally base your business pitch on numbers, data, and proof of concept rather than emotion and impassioned mendicancy. One final major ethical problem that often presents itself to the entrepreneur giving the business pitch is what kind of equity stake they offer to the investors versus how much capital they are trying to raise. If an entrepreneur unethically tries to overvalue their business by offering too little equity or asking for too much cash (or both), the consequences can be that the investors will refuse to invest in the business because it is overvalued from a mathematical and financial standpoint Entrepreneurs have offered as little as three percent equity in their business before, and the usual result is that the investors will not buy into the business. Ethically speaking, the entrepreneurs rnust strike a balance between being able to offer a good value to the investors and not selling their business short.

On the other side of the coin, the investors themselves, also face certain ethical dilemmas Chief among these is not attempting to gain for themselves at the unfair expense of the entrepreneur, an ethical lapse the investors sometimes fall into, For instance, some of the investors will only make a deal with a royalty attached, meaning that they receive a certain percent of each item sold This royalty is usually meant to be in perpetuity, meaning that it will last for as long as the business does (theoretically, forever). This could be considered predatory and opportunistic, as certain sharks will try to take advantage of inexperienced entrepreneurs At certain times, the investors will require from the entrepreneur a very large equity stake, sometimes as high as fifty percent or more This too could be seen as unfairly taking advantage of an inexperienced small business owner, a possible ethical lapse, This can be ameliorated by the entrepreneur making a counteroffer or simply refusing the investor’s deal. Another final ethical problem the investors face is how they deal with each other, Investors will sometimes collude with each other, often to the detriment of other “sharks” or even the entrepreneurr.

The investors will also often undercut each other by offering the entrepreneur a slightly better deal than another investor, and will sometimes try to discredit another investor if they want to make a deal with an entrepreneur who has an exceptionally inventive product or lucrative business. In these scenarios, the entrepreneur must choose for themselves which deal they consider best, taking into account several different factors, the ethics of the investor(s) among them. The show, ultimately, is an accurate reflection of unsavory business and investment practices, some of which border on predatory Although ethics is only one component of an entrepreneur’s or investor’s decision on the show, it often plays a very large role simply because trust and integrity are becoming more important and valuable in the business world as people look for business or investing partners whom they can actually trust.