Update: Swimming with sharks can be painful

Indianapolis entrepreneur Derek Pacqué pitched his business idea to potential investors on national TV and walked away empty handed—by choice.

On the Sept. 14 season premiere of the popular ABC show “Shark Tank,” Pacqué asked the panel of experts for $200,000 in exchange for a 10 percent stake in his startup CoatChex, a ticketless coat check system he developed as a student at Indiana University.

Their reaction was chilly, at best.

The so-called sharks—billionaire entrepreneur Mark Cuban, real estate tycoon Barbara Corcoran, venture capitalist Kevin O’Leary, fashion and branding expert Daymond John and tech mogul Robert Herjavec—tore into the 23-year-old Pacqué when he admitted the company doesn’t have any customers yet.

Cuban called the fund-first, sell-later strategy a “horrible, horrible, horrible idea,” given the glitches that are an inevitable part of any new technology product.

John, Corcoran and O’Leary quickly passed on the investment opportunity.

“You don’t have a plan for distribution and sales, which is the greatest challenge,” O’Leary said.

Herjavec said he like the idea, but challenged Pacqué’s $2 million valuation of the business. Ultimately, he declined to invest.

Cuban saw more potential in the idea. “If it does what says it does, I can flip it in Silicon Valley in about 15 seconds,” he said.

He offered $200,000 for a 33-percent stake in CoatChex, valuing the unproven firm at $600,000. After a quick phone consultation with co-founder Gerry Hays, who teaches venture capital and entrepreneurial finance at IU, Pacqué said no.

Pacqué told the incredulous sharks that he made his pitch too early—he applied to appear on the show on a whim—but vowed to prove that CoatChex will work.
 
“I’m in dead shock that I just turned down a deal from Mark Cuban,” he said on-camera after the exchange. “I don’t know what happened.”