We’ve noticed a shift in young people’s mindset in recent years. Rather than working as employees, many of them choose to go out on a limb and found their own businesses. After all, who would like to constantly adjust to someone else’s whims if they could work for themselves?
So what set off this wave of ambition across the globe? Though many factors played a part, one, in particular, stands out – a reality show by the name of Shark Tank.
Shark Tank allows brave young entrepreneurs to build the business of their dreams. But only as long as they can capture the interest of one of the sharks. ‘Sharks’ is a moniker for the angel investors starring on the show.
When the ABC show first launched 12 years ago, not many people knew about it outside of the US. But over the years, it’s become a widespread sensation. Today, it acts as a source of inspiration to ambitious young entrepreneurs.
Although it is a reality show, the interactions between investors and entrepreneurs remain true to life. If a shark likes the pitched business idea, they can choose to invest their own money in the young business. In return, they get to own part of the company. Negotiating the right amount of stake is often as important as pitching the idea itself.
But how much do the sharks make on Shark Tank exactly? Does the show cover their investment costs? And what happens if the businesses they invest in fail? In this article, we’ll answer these and many other questions about this topic.
How the sharks on Shark Tank make money
All sharks have amassed great wealth well before they appeared on the show. After all, it’s their hefty capital that makes them sharks in the first place. Most of them became rich by founding successful businesses and later selling them.
Investing in a business isn’t the same as rolling the dice in a casino. Rather than closing their eyes and praying for the best, sharks think strategically. Before they invest, they want to make sure their bases are covered.
Thus, they ask the entrepreneurs for two things: a stake in the business and a repayment plan. Some will push as far as demanding regular payment until they recover their investment. Kevin O’Leary is particularly notorious for this.
Once they settle these arrangements, the sharks then keep making steady profits from the business they’d invested in. Since the failure rate is ridiculously low, they rarely regret their investment decisions.
But the sharks also make some money just for appearing on the show. As Shark Tank becomes more and more popular, it nets in more profits. It only makes sense that sharks would demand higher salaries each season. At one point, Mark Cuban said each shark makes 25,000 dollars each episode.
The sharks, therefore, have two major sources of income. Firstly, they make a lot of money from the investments they make on the show. And secondly, they have generous salaries just for being on Shark Tank.
Naturally, everyone is entitled to keep their earnings private and the sharks exercise this right. But according to Variety, sharks made 50,000 in each episode back in 2016. Since each season has 24 episodes, this makes their yearly income as high as 1.2 million dollars, if not even higher.
From another source, we find out that Mark was earning as much as 30,000 dollars per episode in Season 5. This would mean he earned 870,000 dollars for the whole season. But by Season 7, he was earning 32,488 dollars per episode, which is 942,152 dollars per the whole season.
At the same time, Kevil O’Leary claimed he made 30,000 dollars per episode. It thus seems that Mark Cuban is the highest-paid shark on the show, even though the difference isn’t that large.
Daymond claims it costs him from 1 to 5 million dollars per Season to stay on the show. And yet, he managed to make a hefty profit back in Season 6. He invested in Bombas, a company that sells socks. Each sold pair means a gift to the homeless. To this day, it remains one of the most successful Shark Tank businesses.
Another shark, Lori Greiner, also made a very successful investment on the Shark Tank Show. In 2012, she invested 200,000 dollars in Scrub Daddy and asked for a 20% stake in return. By 2019, the sponge company’s sales rose above 200 million dollars.
Compared to the money they receive from their investments, their Shark Tank salaries pale in comparison. They also fall very far behind when compared to other shows.
The three main characters on the Big Bang Theory show earn a whopping one million dollars per episode each. Even if we considered the highest estimated Shark Tank salary of 50,000 dollars, the difference is enormous.
Perhaps they don’t need any further financial motivation to stay on the show. After all, they make a lot of money just from their investments. These profits might simply far outstrip their salaries.
Don’t the sharks lose their own money when a business goes under?
Although rare, some entrepreneurs call off the deals they make with the sharks on Shark Tank. According to Robert Herjavec, this is because they get caught up in the moment. At the time, it was exciting just to strike a deal with one of the formidable sharks.
But once they’d left the room, the entrepreneurs have enough time to reconsider their decision. Many times, they realize the conditions they set just aren’t favorable for them and they choose to revoke the deal. As the saying goes, hindsight is 20/20.
Beyond that, some businesses fail despite the sharks’ generosity. But surprisingly, the number of failures is quite low. From seasons 5 to 9, just 6% of entrepreneurs went bankrupt. Those who remain in business without making any profit represent 20% of all entrepreneurs. But given how easily a company can become a zombie, this is a very low rate.
As you can see, the odds of failure are surprisingly low. Though Shark Tanks naturally lose some of their hard-earned money when a business fails, the risk is often worth it. Since most of the businesses they invest in flourish, they can quickly recover their losses. Not to mention they receive a decent amount of money just for appearing on the show.
FAQ about how much the sharks make on Shark Tank
How much do the sharks make per episode of Shark Tank?
Depending on their separate contracts with the show, the Shark Tank sharks receive a different amount of money per episode. According to reports, they may make between $50,000 and $150,000 per episode.
How much do the sharks make in a season of Shark Tank?
Again, depending on their contracts, the sharks’ earnings in a season of Shark Tank vary, although it is generally believed that they make roughly $1 million.
How much equity do the sharks typically take in the companies they invest in?
In exchange for their investments, the sharks often want a cut of the company’s equity, which can range from 5% to 50%, depending on the agreement.
Do the sharks make more money from their investments or from their salaries on Shark Tank?
It’s difficult to say if the sharks on Shark Tank make more money from their investments or from their salaries because it depends on how well their investments do. So it’s safe to argue that the sharks profit significantly from each source.
How much is each shark’s net worth?
Each shark has a unique value. Mark Cuban’s net worth is projected to be $4.4 billion by 2021, while Lori Greiner’s is projected to be $150 million.
How do the sharks divide the profits when they invest in a company together?
When the sharks pool their money to invest in a business, they typically divide the profits in proportion to their ownership position. For instance, if two sharks each contribute $100,000 for a 10% ownership in a business, they would split the investment’s profits evenly.
Do the sharks get paid more for making successful deals on Shark Tank?
It’s unclear whether the sharks on Shark Tank make more money when they close agreements. Nonetheless, it’s possible that they get bonuses or other rewards for funding profitable businesses.
How does the show compensate the sharks for their time and expertise?
The sharks are paid a salary for their participation on the show as payment for their time and skill.
Have any of the sharks become billionaires from their investments on Shark Tank?
While none of the sharks have achieved billionaire status simply as a result of their investments on the show, others have seen a considerable gain in wealth as a result of lucrative transactions on Shark Tank.
How do the sharks make money from the companies they invest in after the show?
The sharks profit from the businesses they invest in after the program in a variety of ways, including by taking a cut of the earnings or offloading their ownership position to other investors. Also, the attention the businesses get from appearing on Shark Tank frequently results in higher sales and expansion possibilities.
How much do the sharks make on Shark Tank? – Final Thoughts
Ultimately, each shark makes a different sum on the show. This is because the sharks’ money comes mostly from their investment. The more they can invest, the more they will earn in return. Since Mark Cuban is the richest shark on the show, he can earn more money this way than the other sharks.
While the investors get some money from the show itself, it isn’t as much as they make from their investments. Although it goes up with each Shark Tank season, it was set at an estimated 50,000 dollars per episode back in 2016. Compared to other shows, this isn’t a lot.
Still, the profits sharks make from investing in young businesses seem to be enough to keep them on the show.
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