Entrepreneur tells why few survive the Shark Tank

Shark Tank star Steve Baxter has lifted the lid on why the TV show has delivered few winners.

Entrepreneur Steve Baxter is seen at the Myriad tech and innovation festival in Brisbane this week. Picture: AAP

Shark Tank star Steve Baxter has lifted the lid on why the TV show has delivered few winners, telling The Australian the businesses largely aren’t up to scratch.

Speaking on the sidelines of the Myriad technology festival in Brisbane, Mr Baxter said the Channel 10 show cost him about $300,000 a year because he had to hire about four staff full-time to complete due diligence on deals.

“My whole business is about investing, so if I don’t do any deals, I have all the expenditure but no revenue,” he told The Australian. “That’s not something I want, but at the same time, I’m not going to invest in stupid things.

“Some of the things we see is some businesses literally don’t have a repeatable set of financial accounts.

“They don’t use software, or if they do it’s that poorly configured that when you run the same report twice you get a different answer. Which doesn’t fill you with confidence.”

The investor, who is currently serving as Queensland’s Chief Entrepreneur in an unpaid role, said entrepreneurs on the show often didn’t even want a deal, but just the exposure of the TV show.

“We tell them ‘we’re happy to stay mum, just tell us, so we stop wasting each other’s time’,” he said. “We’ll maintain the secret for you, we’ll do that. It saves both time both ways. It’s nothing that unusual.

“I’m doing well from two deals out of nine that I’ve completed, so after three years I’m pretty happy with that.”

Channel Ten's Sarah Harris and Naomi Simpson who star in Shark Tank. Picture: Brett Costello

The Australian revealed last week Mr Baxter was looking to sell his Queensland start-up co-working space River City Labs, and he said money wasn’t a factor in his decision.

Mr Baxter founded River City Labs in 2012, a tech co-working space in Fortitude Valley offering a start-up accelerator as well as desk space and mentoring for young companies.

However, he said that after seven years at the helm it was time for new strategic leadership, along with someone that can spend more time in the space.

“It needs a fresh direction, enthusiasm and a clear path forward. That’s what it needs,” he said.

“People ask me, ‘what are you going to do with all your spare time?’ The problem is, I don’t spend any time there now. It needs a bit more leadership.

“I had an email this morning, we’ve had 12 responses, six solid ones and we’ve turned away five or six tyre-kickers.”

He said he would try to attend River City Labs events whenever he could.

A number of tech companies have wreaked havoc on the ASX over the past 12 months, with GetSwift and Big Un both facing regulator action for poor governance and market disclosure.

According to Mr Baxter, if a company’s aim is to rip off shareholders, customers and staff, then they shouldn’t be in business, let alone listed.

“In general, (the ASX) is a fantastic mechanism to raise primary funds,” he said. “You’ve got to report to the market, I like that concept, and I’ve got two listed companies left in my portfolio.

“There’s ups and downs. If you want to hide lots of bad news as you go, don’t list. That’s about the size of it. And if you’re going to rip people off, just don’t be in ­business.”

Shark Tank judges, from left - Steve Baxter, Janine Allis, Andrew Banks, Naomi Simson and Glen Richards.