What’s Real About Shark Tank? Ask This Entrepreneur Who Took Down $1M
John Greathouse
31

John, very interesting interview — love to get insight behind the scenes. One thing I have always wanted to know about Shark Tank, but haven’t been able to find the answer:

Why does Shark Tank insist on calculating valuation incorrectly?

The sharks are really doing a disservice to budding entrepreneurs (and anyone who wants to learn about investing) by persistently miscalculating valuation. The practice is so annoying that I wrote an entire post about it. In short, the sharks treat the valuation as if the entrepreneur were pocketing the money (selling the shark their personal stock) rather than adding the cash to the company (issuing new stock). The impact on actual valuation can be severe.

I certainly hope and expect that TMP students will know the difference. With Shark Tank insistently muddying the waters, I have less hope that many in the general public will understand.