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Comment by hristov | Hacker News Reader

I was wondering if they take this even if you do not get a deal, and that is true. They have the option to take the 5% equity or 2% royalties when your get your presentation on the air, even if it does not result in a deal. Furthermore, it is their choice whether to take the equity or royalties.

I suppose their thinking is that you get advertising when your presentation goes on the air, and you should pay them equity for that.

But it would really suck if you get your presentation on the air and you get completely mocked and humiliated (which often happens on shark tank) and then the production company still decides to take 5% equity out of you.

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In addition to what you have already noted, I found this sentence interesting:

"The Option shall also vest with respect to businesses other than my Business if I enter into a binding agreement with a shark regarding such other businesses during the two (2) years following my introduction to the shark."

Like a temp agency or recruiter's agreement with an employer regarding employees.

Typically, though not always, the businesses that are torn down the hardest by the sharks have poor fundamentals and little traction.

Five percent equity taken from these businesses is unlikely to ever amount to anything of significant value, although naturally the entrepreneurs presenting their businesses may feel otherwise.

And if your business is in so poor of a state that it gets mocked and humiliated, there seems to be little downside to just re-incorporating if you truly believe in your idea. In this case, wouldn't ABC get nothing?

I understand that in the real world, legal ramifications and damage to one's reputation mean this rarely happens -- but is ABC really going to make a stink?

I would imagine re-incorporating just to screw ABC out of an equity or royalty agreement would be a pretty easy way to end up in a courtroom explaining how what you didn't wasn't some sort of fraud.

The companies that get mocked probably draw a lot of sympathy from folks resulting in purchases. That is granted they have a decent product.

Remember the cardinal rule of show business: there's no such thing as bad P/R.

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