Shark Tank Bite
What is the "Shark Tank Bite"?
Should a company come in asking for $100,000 for 10% of their company, the value of that company is presumed to be $1,000,000. However, if a shark makes a deal for that same $100,000 only instead for 20%, the value of that company can now be presumed to be only $500,000.
That's the Shark Tank Bite.
Whether this is worth it for a company is entirely up to them. If Lori invests in a company but takes more than the entrepreneurs are necessarily happy about, taking a bite of $200,000 off the value, it is up to them if the value of having Lori as a partner is worth more than that.
Will she make up that amount in additional sales? Will having a shark as a partner add to the value over time more than it might have otherwise?
Having a shark on one's team is not always a guarantee of success. And if a buyout offer comes sooner rather than later (say, before the shark has had a chance to bring much value), it shouldn't be unexpected for the buyer to not add a premium just because the company was on TV.