Shark Tank Terms Explained Simply: A Guide to Investor Language, with Everyday Examples

You are watching an episode of Shark Tank. A founder walks in and says: "I'm asking for EGP 2 million for 10% of my company." One investor laughs and says, "Your valuation is crazy." Another asks, "What are your sales? What's your margin? What does it cost you to acquire a customer?" A third offers a royalty on every unit. If the conversation sounds like a language you do not speak, this article is for you.

We explain more than thirty terms that come up again and again on the show and in any meeting with an investor, in plain language and through a single example that we follow from start to finish. You need no background in accounting or investing. At the end you will find a short table of every term in Arabic and English, and answers to common questions.

What is Shark Tank?

The format began in Japan as "Money Tigers" in 2001. It is owned by Japan's Nippon TV and Sony Pictures Television, and by 2024 it had reached 50 versions around the world¹. It became "Dragons' Den" in the UK from 2005¹ and "Shark Tank" in the United States on ABC, where it is produced by MGM Television in association with Sony Pictures Television and is now in its 18th season².

In Egypt, the first season of "Shark Tank Egypt" was announced to air exclusively on CBC and the WATCH IT platform in January 2023³. The second season started in October 2023 and the third in October 2024⁴, and the fourth on 8 October 2025⁵. According to coverage of the fourth season's launch, the programme has facilitated investments of more than EGP 874 million⁵. Elsewhere in the region, "Shark Tank Dubai" premiered on Dubai TV in December 2023⁶.

The idea of the show is simple: a founder presents an idea or a company to a panel of investors and asks for money in exchange for a share of the company. The investors ask questions, then each decides whether to make an offer or declare that they are "out". What makes the show useful to any business owner, even one not looking for an investor, is that the questions asked on it are the same questions you should ask yourself before you start.

The example we will follow: Salma's natural soap workshop

To understand the terms in numbers, we will use a hypothetical example. Salma makes natural soap by hand and sells it online and to a few pharmacies. These are her figures for the past year:

Salma wants to buy machines and expand distribution, so she goes on the show and says: "I'm asking for EGP 1 million for 10% of my company." Let us see what each word in the conversation that follows means.

Part 1: Terms of the pitch and the ask

1. The ask

This is the sentence every pitch starts with: an amount in exchange for a percentage. In our example, EGP 1 million for 10%. That short sentence carries two decisions: how much money you need, and how much of your company you are willing to give up. So the amount should be calculated, not a round number chosen because it sounds good. The investor will immediately ask, "What will you do with the million?", and a good answer is detailed: EGP 600,000 for machines, EGP 300,000 for stock and EGP 100,000 for marketing.

2. Equity

Equity is a share of ownership in the company. Someone who owns 10% owns a tenth of the company: a tenth of any profits it distributes, a tenth of the price if it is ever sold, and usually a say in decisions according to what the partners agree⁷. The important difference is that an investor who buys equity is not lending you money: you do not repay them in instalments; they become a partner who gains if the company does well and loses if it does badly.

In everyday terms: imagine you and three friends bought a taxi together in equal shares. Each of you owns a quarter of the car, or 25%. Nobody lent anybody anything; you are all partners in the income and in the car's price if you sell it.

3. Valuation

Valuation is what the whole company is worth. When Salma asks for EGP 1 million for 10%, she is implicitly saying the whole company is worth EGP 10 million, because 10% of 10 million is 1 million. The formula is simple:

Valuation = amount asked ÷ percentage offered
1 million ÷ 10% = EGP 10 million.

That is why the first thing investors do on hearing the ask is this division in their heads. And if the figure looks far larger than sales and profits justify, you hear the famous line: "Your valuation is too high."

4. Pre-money and post-money valuation

Here is a detail many people mix up. Pre-money valuation is what the company is worth before the investor's money goes in; post-money valuation is what it is worth afterwards, which is the pre-money value plus the amount invested⁸.

• Post-money valuation = 1 million ÷ 10% = EGP 10 million.
• Pre-money valuation = 10 million − 1 million = EGP 9 million.

Why does the difference matter? Because the million the investor pays becomes part of the company itself. If the company is worth 9 million and then receives 1 million in cash, it is worth 10 million, and the investor owns 10% of it. But if you consider your company worth 10 million before the money goes in, the million buys a smaller share: 1 million ÷ 11 million ≈ 9.1%. A small difference in wording, but it changes the ownership percentage.

5. Dilution

When a company issues new shares to a new investor, every existing owner's percentage falls, even if they sold nothing. That is dilution⁷.

Salma owns 100%. After the investor comes in with 10%, she owns 90%. Two years later she needs more funding, and a second investor takes 20% in newly issued shares. That 20% does not come out of Salma's share alone; every existing owner's percentage falls proportionally:

• Salma: 90% × 80% = 72%.
• First investor: 10% × 80% = 8%.
• Second investor: 20%.

Dilution is not necessarily a loss. If the company's value has risen, 72% of a larger company may be worth more than 90% of a small one. But a founder who gives away large percentages early can find, after a few rounds, that they own only a small share of their own company.

6. Counteroffer

When an investor makes an offer, the founder can reply with a different one. For example, the investor says "I'll give you the million for 25%", and Salma replies "a million for 15%". That is a counteroffer. At heart, it is a negotiation over valuation: 25% implies a valuation of 4 million, and 15% implies about 6.7 million.

7. Contingent deal

Sometimes an investor says "I'm in, on one condition." The condition might be that the founder obtains a patent, signs a contract with a particular distributor, or that another investor joins the deal. If the condition is not met, the deal does not happen.

8. "I'm out"

This is how an investor announces they will not make an offer. It is usually followed by a reason: the valuation is too high, the product is easy to copy, or the founder does not know their numbers. That reason is the most valuable thing you can learn from the episode, because it is the same reason a bank or a real investor would turn you down.

Part 2: The numbers investors ask about

9. Revenue or sales

Revenue is all the money that comes in from selling, before any cost is deducted. Salma sold 12,000 bars at EGP 100, so her revenue is EGP 1.2 million. It is an important figure, but it does not tell you whether the business makes money.

A common mistake: a founder says "we did a million last year", meaning sales, and the listener understands that they made a million in profit. There is a big difference between the two.

10. Lifetime sales

A question that comes up constantly on the show: "What are your sales since you started?" The investor wants to know what you have actually achieved, not what you expect. It is usually followed by "And in the last 12 months?", because lifetime sales can hide a business in decline. A business that sold 2 million over five years, only 100,000 of it last year, is not the same as one that sold 2 million with a million of it last year.

11. Cost of goods sold

This is the direct cost of making what you sold: materials, packaging and the pay of whoever makes the product. In Salma's case, each bar costs EGP 40, so the cost of 12,000 bars is EGP 480,000. Expenses such as office rent or advertising are not included; those are separate operating expenses.

12. Gross margin

This is what remains of revenue after cost of goods sold, as a percentage of revenue⁹:

(1,200,000 − 480,000) ÷ 1,200,000 = 60%.

So for every EGP 100 of sales, Salma keeps EGP 60 to cover rent, administrative salaries, advertising and taxes, and then profit. Investors like a high gross margin because it leaves room to spend on marketing and growth. With a product whose gross margin is 15%, any small pricing mistake or rise in material costs can turn it into a loss.

13. Net profit and net margin

Net profit is what remains after every cost: cost of goods, rent, wages, advertising, interest, depreciation and taxes. Net margin is that figure as a percentage of revenue⁹. Salma made EGP 186,000 on revenue of 1.2 million, a net margin of about 15.5%.

In everyday terms: if your salary is EGP 10,000, that is your revenue. After rent, transport, food and bills you have EGP 1,500 left. That 1,500 is your net profit, and 15% is your net margin.

14. EBITDA

An abbreviation viewers hear a lot: earnings before interest, taxes, depreciation and amortisation¹⁰. Its use is that it shows the profit of the operation itself, separate from how the company is financed (with loans or not), from taxes, and from spreading the cost of equipment over several years.

Suppose Salma paid EGP 20,000 in interest on a loan during the year, depreciation on her machines was EGP 30,000, and income tax was EGP 54,000. Then:

EBITDA = 186,000 + 54,000 + 20,000 + 30,000 = EGP 290,000.

A warning: this figure is not cash available. Interest and taxes are actually paid, and machines have to be replaced one day. So a founder who shows EBITDA alone to make the numbers look better raises an experienced investor's suspicion.

15. Unit economics

The question here is: do you make money on each unit you sell, and how much? In Salma's case, each bar earns EGP 60 after the cost of making it. But real unit economics also take into account what it cost to win the customer who bought that unit, which brings us to the next two terms.

16. Customer acquisition cost (CAC)

This is what you spend on marketing and sales to win one new customer¹¹. Salma spends EGP 30,000 a month on advertising and gains 600 new customers, so:

Customer acquisition cost = 30,000 ÷ 600 = EGP 50.

Investors like this figure because it tells them: if we give you a million for marketing, how many customers will you bring in? And if acquisition cost rises as spending rises, growth is harder than it looks.

17. Customer lifetime value (LTV)

This is the total a single customer brings you over the whole time they deal with you¹¹. Suppose Salma's customer buys six bars on average over that time. The margin on each bar is EGP 60, so:

Customer value = 6 × 60 = EGP 360 of gross margin.

The key comparison: customer value is EGP 360 and acquisition cost is EGP 50, so every pound spent on advertising returns more than seven pounds of margin. That ratio makes an investor lean forward in their chair. If acquisition cost were EGP 300, Salma would barely make anything from her new customers, and every increase in advertising could deepen her losses.

18. Monthly and annual recurring revenue (MRR and ARR)

Recurring revenue is revenue expected to renew every month from subscriptions or contracts¹². Monthly recurring revenue is abbreviated MRR and annual ARR. For example, if Salma launched a EGP 250 monthly subscription that delivers a box of soap every month and 400 customers signed up, her monthly recurring revenue would be EGP 100,000 and her annual recurring revenue 1.2 million. Investors value recurring revenue more than ordinary sales because it is more predictable.

19. Burn rate and runway

Burn rate is how much cash a company loses each month: the difference between what goes out and what comes in. Runway is the number of months the company can keep going on the cash it has before it runs out¹³.

If a startup spends EGP 150,000 a month and takes in 100,000, its burn rate is EGP 50,000 a month. If it has EGP 300,000 in the bank, its runway is six months. In that time it must reach profit or find new funding. That is why an investor asks, "How many months does your cash last?": a founder with two months left will accept a worse offer.

20. Break-even

This is the sales volume at which revenue covers all costs, so there is neither profit nor loss. "When will you break even?" is one of the most frequent questions put to loss-making businesses. We explain how to calculate it in detail, with a calculator for your own numbers, in our guide to break-even and working capital.

21. Cash flow

Cash flow is the actual movement of money: what came into the account and what went out. A business can be profitable on paper yet short of cash. For example, Salma sells to pharmacies on credit, so she records the sale and the profit today, but the money only arrives after 60 days. Meanwhile she has to pay suppliers and workers. That is why it is often said that companies do not stop only because they lose money; many stop because the cash runs out.

22. Inventory

Inventory is the goods and materials you hold that have not yet been sold. Investors ask about it because it is money tied up: every bar of soap in the storeroom is EGP 40 that Salma has paid and not yet recovered. A business that needs a large stock in order to sell needs more capital than one that sells on pre-order.

Part 3: How does an investor value the company?

23. Valuation multiple

The best-known method investors use on the show is the multiple: they take one of the company's figures, such as profit or sales, and multiply it by a certain number. The right multiple varies by industry and over time, and one of the best-known references is the tables published by finance professor Aswath Damodaran at NYU Stern, which give average multiples by sector for the US market, with separate datasets for other markets¹⁴. Multiples from one market should not be carried over to another unchanged, because risk and the cost of capital differ.

Back to Salma. Her asking valuation is EGP 10 million:

• Against sales: 10,000,000 ÷ 1,200,000 ≈ 8.3 times annual sales.
• Against net profit: 10,000,000 ÷ 186,000 ≈ 54 times annual profit.

In other words, for the investor to earn back the price of their stake from the company's profits at the current level would take about 54 years. That is why you will hear an investor say, "You're asking for a tech company's valuation for a soap workshop." For anyone to accept a valuation like that, Salma has to convince them that profits will multiply soon, with numbers rather than hopes.

24. Why your valuation differs from the investor's

Founders usually value their company by what it could become: the big market, the plans, the years they have put in. Investors value it by what it is now, then add value for the future cautiously, because they know most plans do not work out as written. Negotiation on the show is really an attempt to meet somewhere between those two numbers.

If the investor offers a million for 25%, they are valuing the company at 4 million, about 21.5 times current profit and 3.3 times sales. That valuation still assumes growth, but it sits closer to the current figures.

Part 4: Types of deal

25. Royalty deal

Instead of taking a larger share, the investor takes a fixed amount or a percentage of every unit sold, until a set sum is recovered or for a set period¹⁵. For example: "I'll give you the million for 10%, plus EGP 10 on every bar you sell until I get back 1.5 million."

What does that mean for Salma? Her margin per bar falls from EGP 60 to 50 until the royalty is paid off. At her current sales (12,000 bars a year), she pays EGP 120,000 a year, so recovering 1.5 million would take more than 12 years if sales do not grow. A royalty therefore suits a founder expecting rapid sales growth and is expensive for one whose sales are slow. One advantage is that the founder keeps a larger share of ownership.

26. Debt deal

Some investors offer a loan instead of, or alongside, equity: money repaid with interest over a set period. The essential difference is that a loan must be repaid whether or not the business makes money, whereas a partner shares the risk with you. A loan suits a business with regular cash flow that covers the instalments, and is dangerous for one still losing money.

27. Convertible note

This is a loan that may later convert into a share of the company instead of being repaid in cash, on terms the two sides agree in advance. The US Securities and Exchange Commission defines convertible securities generally as securities, usually bonds or preferred stock, that can be converted into a different security, typically the company's common stock⁷. It is often used with early-stage startups because it postpones the question "what is the company worth now?" until a time when the numbers are clearer.

28. Licensing deal

In a licensing deal, the owner of a product or idea allows another company to make and sell it in exchange for a percentage of sales. The idea's owner runs no factory and holds no stock, but receives a smaller percentage. It suits an inventor who does not want, or is not able, to build a full company.

29. Intellectual property and patents

Intellectual property is the legal rights over what you have created: a trade name, a design or an invention. A patent is legal protection that stops others from making and selling your invention for a set period. Investors ask about it because a product that is easy to copy can be cloned by a large company and sold more cheaply. So you will often hear "Do you have a patent?" for innovative products, and "What stops others from copying you?" for everything else.

30. Smart money

Money is not all an investor brings. An investor with a distribution network, industry experience or relationships with large chains brings what is called "smart money". That is why some founders on the show accept a lower offer from an investor who understands their sector over a higher offer from one who adds nothing but cash. If one of the investors owned a pharmacy chain, their offer to Salma could be worth more than a higher number from someone else.

Part 5: What happens after the handshake?

31. Due diligence

The handshake on screen is a preliminary agreement. Afterwards the investor examines the company in detail: accounts, contracts, taxes, intellectual property and legal obligations, to confirm that what was said in the pitch is true¹⁶. This stage is not a formality. In an analysis published by Forbes of companies that appeared in seasons 8 to 13 of the US show, in which 112 of about 300 companies contacted responded, about half of the deals never actually closed, and 15% closed on terms different from those agreed on screen¹⁷. The sample consists of companies that chose to respond, but it is enough to show that the handshake is the start of the negotiation, not the end.

The lesson for any founder: never state a figure in your pitch that you cannot prove with documents. The investor will check, and a figure that does not hold up can cancel the whole deal.

32. Cap table

This is a table showing who owns how much of the company and how ownership has changed with each investment round. In the dilution example above, Salma's cap table after the two rounds is: Salma 72%, first investor 8%, second investor 20%. New investors look at this table to make sure the founder still owns enough to stay motivated.

33. Exit

The exit is how the investor gets their money back and makes a profit: selling the company to a larger one, selling their stake to another investor, or listing the company on the stock exchange. From the start, the investor asks themselves, "How will I get out of this deal?" A business that distributes no profits and that nobody is expected to buy is one where an investor struggles to see a way to recover their money.

34. Scalability

A scalable business is one whose sales can grow a lot without its costs growing in the same proportion. An app can serve a million users at a cost not much higher than serving a thousand. A barber's shop needs another chair and another barber for every increase in customers. Salma's handmade soap is limited by the number of workers, which is why she wants machines: to make the business more scalable.

35. Traction

Traction is evidence that the market wants the product: growing sales, returning customers, signed contracts, a waiting list. Investors value traction more than ideas, which is why a founder who has sold 12,000 bars gets more attention than one with an untested idea. If you have no traction yet, test your idea cheaply as we explain in our guide to testing a business idea.

36. Moat

A moat is what protects your business from competitors, as a moat protects a castle: a strong brand, a patent, a cost advantage others cannot match, exclusive contracts, or a customer base that finds it hard to switch. "What's your moat?" means: if you succeed, why won't a large company come and take your customers?

37. Controlling stake

When an investor asks for 51% or more, they are not just asking for a bigger percentage; they are asking for control. In many companies ordinary decisions are taken by a majority of shares, so whoever owns more than half holds the decision, depending on the company's contract and articles. That is why founders often hesitate at 51% offers, even when the amount is tempting. The contract can include rights that protect the smaller partner, such as requiring their consent for certain decisions, but that needs a lawyer to draft it carefully before signing.

What does this mean for a business owner in Egypt?

The environment in Egypt is developing. In February 2026 the Egypt Startup Charter was launched in the presence of the Prime Minister; it aims to mobilise USD 1 billion of financing over five years and includes a startup classification certificate¹⁸. In September 2025 the Financial Regulatory Authority issued Resolution No. 194 of 2025 setting rules for digital platforms for investing in private equity and venture capital fund units¹⁹, giving investment in these funds a regulated digital framework.

But before you think about an investor or a fund, know that the terms in this guide are not the show's language alone. The bank assessing your loan asks about cash flow and break-even, the partner joining you negotiates valuation and equity, and an individual investor wants to know how they will get their money back.

Whether you are looking for an investor, a partner or a bank loan, the questions are much the same: how much do you sell? How much do you make on each unit? What does a customer cost you? When will you break even? How much do you need, and why? And how will whoever funds you get their money back? If you are applying for a loan, we explain what banks ask for in our guide to feasibility studies for bank loans.

Glossary

Mistakes that keep coming up in front of investors

When you watch the show after reading this guide, you will notice that the reasons for rejection repeat. These are the most common, and all can be avoided before the meeting:

• Confusing revenue with profit: the founder says "we made a million", then it turns out they are losing money. The investor stops trusting every number after that.
• A valuation with no basis: a figure dozens of times the year's profit with no convincing growth plan. It is better to explain how you reached the valuation, even if it is high.
• Not knowing the unit cost: someone who does not know what the product costs them cannot convince anyone they make money on it.
• Asking for money with no spending plan: "I need a million to expand" is not a plan. The investor wants to know where every pound will go and what it will bring back.
• Defending the idea instead of answering the question: when an investor points out a weakness, the strongest answer is to acknowledge it and explain how you will deal with it, not to deny it.
• Turning down every offer on valuation alone: sometimes a lower offer from an investor who adds distribution or expertise is better than a higher one with no added value.

How to prepare your numbers before facing any investor

The most awkward moment on the show is when an investor asks for a figure and the founder stumbles. The answer is not memorising terms but having your numbers calculated and written down before the meeting. These are the figures you should know about your business:

1. Sales in the last 12 months, and since you started.
2. Unit cost, selling price and gross margin.
3. Monthly net profit or loss.
4. Customer acquisition cost and customer value.
5. Break-even, and when you expect to reach it.
6. How much you need, broken down into specific items.
7. The valuation you are asking for, and how you reached it.

The detailed study at Kleverz calculates much of this on your own project's data: investment costs, sales forecast, three-year monthly cash flow, break-even and capital required, with optimistic and pessimistic scenarios. It is a good starting point before any conversation with an investor, a partner or a bank. If your idea is still at an early stage, start with the free check.

Frequently asked questions

Sources

1. Deadline via Yahoo News. 'Dragon's Den' Reaches 50th Remake Worldwide For Sony & Nippon TV (2024-02-29) — secondary source; The Conversation via Asia Times. Dragons' Den, Shark Tank are TV knockoffs of a Japanese original (2025-01-02) — secondary source. Checked 14 October 2026.
2. ABC. About Shark Tank. Checked 14 October 2026.
3. Enterprise. Shark Tank Egypt press release (IMP, Sony Pictures Television, United Media Services) (2022-12-19). Checked 14 October 2026.
4. BroadcastPro ME. Shark Tank Egypt Season 2 to premiere on October 25 (2023-10-24) — secondary source; BroadcastPro ME. Shark Tank Egypt Season 3 premieres this month (2024-10-10) — secondary source. Checked 14 October 2026.
5. Egypt Telegraph. انطلاق الموسم الرابع من برنامج شارك تانك مصر (in Arabic) (2025-10-08) — secondary source; MENA Startup Digest. Shark Tank Egypt Season 4 (2025-10-08) — secondary source. Checked 14 October 2026.
6. Zawya (AETOSWire). Dubai TV premieres Shark Tank Dubai. Checked 14 October 2026.
7. Investor.gov (SEC). Glossary: Stock; Investor.gov (SEC). Glossary: Convertible Securities. Checked 14 October 2026.
8. Carta. Pre-money vs. post-money valuations (2024-06-24) — secondary source. Checked 14 October 2026.
9. OpenStax (Rice University). Principles of Financial Accounting, Chapter 6 Key Terms; OpenStax (Rice University). Principles of Finance, 6.6 Profitability Ratios and the DuPont Method. Checked 14 October 2026.
10. BDC. Glossary: EBITDA. Checked 14 October 2026.
11. BDC. Glossary: Customer acquisition cost; BDC. Glossary: Customer lifetime value. Checked 14 October 2026.
12. Carta. Annual recurring revenue (ARR) (2023-08-08) — secondary source. Checked 14 October 2026.
13. BDC. Glossary: Cash runway. Checked 14 October 2026.
14. Aswath Damodaran, NYU Stern. Price to Sales Ratios by Sector (US), data as of January 2026 (2026-01); Aswath Damodaran, NYU Stern. Damodaran Online: Data (global and regional datasets). Checked 14 October 2026.
15. Inc.. Royalty Financing (Inc. Encyclopedia) — secondary source. Checked 14 October 2026.
16. National Futures Association. Investor Advisory: Conducting Due Diligence (2025-10-09). Checked 14 October 2026.
17. Forbes Brasil. O que há por trás dos negócios no Shark Tank nos EUA (2023-01-11) — secondary source. Checked 14 October 2026.
18. MOIC. Egypt as a Regional Platform for Entrepreneurship (Egypt Startup Charter) (2026-02-07). Checked 14 October 2026.
19. FRA. قرار مجلس الإدارة رقم 194 لسنة 2025 بشأن ضوابط إنشاء منصات رقمية للاستثمار في وثائق صناديق الملكية الخاصة ورأس المال المخاطر (in Arabic) (2025-09-18). Checked 14 October 2026.