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Shark Tank India, a popular show for budding entrepreneurs seeking investment, often showcases promising deals between contestants and investors.
However, Namita Thapar, Executive Director of Emcure Pharmaceuticals and a seasoned "shark" on the show, reveals a stark reality.
Despite the initial promises made on air, most of these deals fall through during the post-show due diligence process. Thapar, in her conversation with the YouTube channel Finance with Sharan, highlighted a "lack of integrity" among founders, which is a primary reason for the breakdown of these deals.
Some founders even stop communicating with the investors, a practice known as "ghosting," especially after their deal is shown on TV.
“A lot of people are very clueless when it comes to the count of investments because what they don’t realise is when we start doing our due diligence, there are multiple things that… there’s literally a lack of integrity on the part of founders. There are many founders who have ghosted me," she shared.
According to Thapar, many entrepreneurs, after securing a deal on the show, stops communicating with the investors, leaving them in a lurch. Thapar explains one of the critical issues that emerge during the due diligence phase is the significant discrepancy between the numbers presented on the show and the actual financials of the companies.
She pointed out that these discrepancies are not minor but substantial, indicating a deliberate attempt by some founders to mislead the investors and the audience for a favorable outcome on the show.
"There are many founders who, when we do the due diligence, the numbers they quoted at the tank, they are completely off, not just marginally but substantially off,” she said.
Another hurdle she highlighted in materializing the deals is the founders' reluctance to consolidate their business entities. Thapar mentioned that upon deeper investigation, it's discovered that some entrepreneurs operate multiple companies and are unwilling to merge them as part of the deal, complicating the investment process and often leading to the deal's collapse.
“So what people don’t realise is, that they see us giving these offers and then they say ‘you did not do the deal’ but what they don’t realise is that there is a lot of integrity issues, which is why the count goes down substantially. I think this is one thing that whoever is following Shark Tank must be aware of, that there is a margin between what’s revealed at the tank vs what really comes out in the due diligence,” she added.