Shark Tank: Even Mark Cuban and Kevin O’Leary Had to Abandon a Deal If 1 Major Rule is Violated

In the world of venture capital, transparency is crucial. When entrepreneurs come onto Shark Tank seeking investments, they are expected to provide accurate and complete information about their businesses. However, transparency is also needed from the investors to ensure that everything is above ground and can flow smoothly. After all, with there being so much at stake, it makes sense that Mark Cuban, Kevin O’Leary, the other investors, and even the young businesspeople have certain rules to follow.

The Sharks are known for their fierce negotiations and willingness to invest in promising businesses. However, there is one major rule that, if violated, causes even seasoned investors like Cuban and O’Leary to walk away from a deal.

The only non-negotiable for Sharks like Mark Cuban and Kevin O’Leary

Ever since Shark Tank debuted in 2009, many entrepreneurs have found success with the show’s investors. However, everyone who has been on the show has had a rather strict set of rules to follow. According to reports from Looper, it was revealed that even though Sharks like Mark Cuban and Kevin O’Leary run most of the deals, the businesspeople needed to abide by certain rules to not be booted out of the show. But there was one non-negotiable that had to be followed by both the investors and entrepreneurs alike: reaching out to the Sharks ahead of the taping.

Most of the show consists of the investors getting to hear about a product for the first time. So, reaching out beforehand would throw a wrench into those plans. In fact, it wasn’t just the contestants who had to follow this rule, but the investors as well. Although it is possible for the Sharks to be pitched an idea they’ve already heard about, investors like Cuban and O’Leary would be forced to step back from that product to even the playing field.

The ‘Do Not Contact’ rule might be one of the most important ones. However, there is another one that every entrepreneur coming in contact with the Sharks should keep in mind.

Shark Tank 101: Get a proper contract

In the world of Shark Tank, landing a deal on TV is only the beginning. The real work starts when the cameras stop rolling, and one of the most important steps is securing a proper contract. According to reports from Looper, even if you’ve impressed the Sharks and secured a handshake deal, nothing is finalized until both parties agree on legal terms. In fact, entrepreneurs must understand that the televised pitch is only the first phase of negotiation. Once a Shark like Mark Cuban, Kevin O’Leary, or even Lori Greiner shows interest, the next step is due diligence.

Getting a proper contract is essential because it formalizes the terms of the investment, including equity, the amount of capital invested, and any other special provisions the investors might require. However, sometimes, a deal can fall through even in its final stages like it did for Hy-Conn founder, Jeff Stroope. In fact, reports from Looper revealed that the entrepreneur had backed out of the $100,000 deal because the richest investor, Cuban, had allegedly tried to alter the contract and cut out the businessman.

Most people might have harbored ill feelings against Cuban. But Stroope chose to take it in his stride and accept that it was just business. However, the whole situation ended up proving that nothing is ever definite with Shark Tank deals.

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