What Do Investors Look For? A Shark Tank Investor’s Honest Checklist

What do investors look for? A founder who genuinely believes every word of the pitch, a story that hits the problem in the first minute, a team that can actually execute, and a clear answer to where every dollar goes. Kevin Harrington, an original shark on Shark Tank, says the passion gets you in the room, but the team and the use of proceeds get you the check.

Kevin has taken thousands of pitches. His official bio credits him with creating the infomercial, pioneering the As Seen on TV brand, launching more than 500 products that produced well over $5 billion in global sales, and building 20 companies that each topped $100 million in revenue.

I wanted the inside advice a lot of entrepreneurs need right now. How do you approach investors, and what really matters when you’re presenting your business idea? Here’s what he told me.

What investors look for in the first 10 seconds

Before you’ve said anything useful, Kevin is already doing what he calls the old 10-second look. How confident are you? How do you present yourself? Are you delivering this in a powerful, passionate way?

Most of all, he wants to know you believe the words coming out of your mouth. “Too many people, someone’s written them a script.” He wants the real deal, not someone reciting a deck they didn’t build.

How to pitch to investors: tease, solve, seize

At one pitch contest, founders had eight minutes each. One guy took seven minutes to even mention his product. Kevin had to tell him straight: if you’re taking eight minutes of all these valuable people’s time, learn to deliver a reasonably good pitch. “You lost us.”

His structure is simple, and he slowed down to make sure I got it:

1. Tease. Open with an attention-getting problem.
2. Solve. Show how you solve it, with demonstrations, “magical transformations,” testimonials and documentation, plus a little competitive analysis.
3. Seize. Close with an irresistible offer.

Kevin points out he hears pitches for a living, but most people you pitch don’t. If you don’t grab their attention with the problem first, you’re probably not going to land, “especially if you’re looking for money.”

Why investors stopped betting on the jockey

I asked Kevin whether he’d ever backed someone on attitude alone. Somebody who walks in with so much certainty that you just want to work with them. His answer surprised me. Not anymore.

He used to bet on the jockey, the entrepreneur. He’s been let down too many times. Plenty of gung-ho founders with all the passion in the world have driven a business into the ground because they couldn’t execute. Maybe they had one skill set, but no finance or operations, and they never surrounded themselves with people who did.

The person, their passion and their belief still weigh very heavily. But if someone wants half a million dollars, Kevin wants to see the right structure, the right team and the right expertise behind them first. “I’ve seen entrepreneurs run through the money real quick and say, ‘Well, sorry, we just didn’t make it.'”

Tony Robbins once told me your business will eat as much money as you throw at it. Kevin agreed. That’s exactly why investors want counterbalances around a passionate founder.

Use of proceeds: the question that kills deals

One of the big questions on Shark Tank was always: what’s the use of proceeds? In plain English, if I write you the check, where does the money go?

Kevin told me about a founder who wanted a quarter of a million dollars. The plan was a down payment on a building, office furniture, a copy machine and printers. That was the whole $250,000. Kevin was out. Where was the marketing plan? The rainy day fund? The budget for public relations, advertising or a launch? “You can tell pretty quickly that they really haven’t thought out how they’re gonna really launch this business.”

A good operations or finance person makes you think through the cost of hiring and the cost of weathering the opening months of cash flow, because cash flow doesn’t come out of the box. It builds.

Then there’s the office. Kevin once visited a company with about five employees in 7,000 square feet of expensive space, complete with a ping pong table and a Skee-Ball machine. “You don’t need a ping pong table until you become Facebook.” I see so many people trying to pimp out their office space. Get the profits coming in first, then deck it out later.

Same goes for the funding announcement. A lot of people celebrate millions in investment, money that isn’t theirs, without a plan for it. Kevin’s point: nobody wants to give you $5 million that’s supposed to last 18 months and see you back in six or eight months asking for more. Unless your numbers have changed dramatically, that second round gets very hard.

Get investor-ready before you ask

Kevin’s biggest early mistake was being a young, cocky entrepreneur who thought he could do it all himself. He started with $25,000 and assumed that once he was successful, people would throw money at him. It doesn’t work like that. He ran out of capital.

So he hired a former bank president who knew how to raise money. The first thing that man asked was, “Where’s your contract file?” Kevin didn’t have one. With 30 products on air and eight or ten contracts per deal, writers, producers, directors, hosts and inventors, they had 300-plus contracts scattered everywhere. A lender wants to see every one of them, and wants to know there are no contingent liabilities like possible lawsuits waiting out there.

They spent 90 days getting ready before they asked anyone for money. Then they raised $3 million, which Kevin says gave them enough capital to grow to $100 million in sales. Whether you’re raising on a SAFE, a convertible note or a priced round, the diligence starts the same way: show me what you’ve signed.

My takeaway? Ignorance isn’t always bliss. And if you don’t have a strength in a certain area, find someone who does. It’s the lesson almost every first-time founder learns the expensive way.

Bring in experts whose track record helps you raise

When Kevin launched a beauty business with the model Kathy Ireland, he admitted beauty wasn’t his world. He does gadgets, fitness and kitchen products. So he brought in an executive who had spent a decade running a major beauty company, first as a consultant and then as president and COO.

That hire did two jobs. The company got real expertise, and Kevin used the executive’s resume to go out and raise capital for the new venture. The right people help you run the business, and they help you get the right money to grow it.

Prove it before you bring investors in

Kevin likes being first to market, but he’s honest that pioneering is riskier. As an investor, he prefers to get in when something is safer and more proven. As an entrepreneur, he expects to fail more than he succeeds, so he tries to fail fast and fail cheap, then get to the big winner.

That’s why he’ll often keep 100% ownership of a new idea until he’s proven it, and only then bring in investors if he needs to raise big money. “I don’t have to write every check, but I’ve proven it out now, so it’s a little safer investment.” To me that’s calculated risk, the same way Richard Branson likes to negotiate the downside before he jumps.

And proof is exactly what investors are looking for. For every company of his that hit $100 million, Kevin says, two or three didn’t succeed. I love that he said it out loud, because it gives people permission to be okay with failing on the way to a win.

Run a dollars-per-minute check on your day

One more habit worth stealing: how you spend your time. Kevin learned it from Home Shopping Network, which schedules tomorrow’s airtime based on today’s sales per minute. If a product was expected to do $2,000 a minute and did $1,000, they’re not happy, and the schedule changes.

He runs his day the same way. If he’s got three things he could do in the next hour, which one has the highest profit potential for the time? Some people waste half their day on things that generate no revenue, then wonder why they’re out of cash. My view: a founder who manages minutes like that will probably manage an investor’s money the same way.

What investors look for: a pre-pitch checklist

1. Can you say the problem in your first 30 seconds?
2. Do you have a demo, a transformation or a testimonial that proves you solve it?
3. Is there a clear, irresistible offer at the end?
4. Who on your team covers finance and operations?
5. Can you show line by line where every dollar goes, including marketing and cash flow?
6. Are all your contracts in one file, with no surprise liabilities?
7. What have you already proven with your own money?

Kevin closed with a quote from Paul J. Meyer that he lives by: “Whatever you vividly imagine, ardently desire, sincerely believe, and enthusiastically act upon, must inevitably come to pass.” I’d add one thing. Knowing what investors want won’t get you funded. Walking in with every answer on this list will.

FAQ

What do investors look for in a startup?

A confident founder who believes in the idea, a team that covers finance and operations, proof the product works, and a clear plan for the money. Shark Tank investor Kevin Harrington says passion alone no longer gets his check without the team to execute.

What do investors look for in a pitch?

Kevin Harrington wants a tease, solve, seize structure: open with an attention-getting problem, solve it with demonstrations, testimonials and competitive analysis, then close with an irresistible offer. Don’t wait seven minutes to say what the product is.

What does use of proceeds mean?

Use of proceeds is exactly where an investor’s money will be spent. Investors want it tied to your business and marketing plan, with room for marketing, hiring and early cash flow, not just buildings, furniture and equipment.

Why do investors bet on the team, not just the founder?

Passionate founders without finance or operations support often burn through capital before the business works. Harrington says he’s been let down too many times betting on the jockey alone, so he backs founders surrounded by people who can execute.

How do you prepare your business to raise money?

Organize every contract in one file, clear up possible liabilities, build a use-of-proceeds plan and bring in experienced help. Harrington’s company spent 90 days getting ready before raising $3 million.

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