Businessman Aaron McDaniel entered the “Shark Tank” with excessive hopes and a revolutionary idea: an actual property crowdfunding platform known as Tycoon Actual Property that might permit on a regular basis folks to spend money on property for as little as $1,000.
One of many company on season 6, episode 16, was the previous AT&T vice chairman. He sought $50,000 for a 5% stake in his firm, promising returns “8 to 10 occasions” greater than conventional investments.
His pitch emphasised democratizing entry to actual property investing, which has traditionally been “tough, intimidating, and costly.”
Contemplating two of the sharks, Kevin O’Leary and Barbara Corcoran, made their thousands and thousands in actual property, he was positive to get an ear — and, unbeknownst to him, actual knowledgeable pushback from the specialists.
McDaniel assured the Sharks that each one offers had been professionally vetted, working solely with high builders, and buyers would get their a reimbursement if funding objectives weren’t met.
“I hate it, I’m out,” Mark Cuban declared earlier than McDaniel may even end his presentation. The previous Dallas Mavericks majority proprietor didn’t really feel snug from the onset of his remarks.
O’Leary shortly adopted with, “I odor jail time,” setting the tone for what would change into one of many extra contentious episodes in Shark Tank historical past.
The remaining Sharks weren’t a lot kinder. They grilled McDaniel concerning the legitimacy of his enterprise mannequin and the potential dangers to uninformed buyers.
Corcoran voiced considerations concerning the “thriller investor” behind every property.
“How do I do know he’s received eye? How do I imagine his projections? Spooky and albeit unfair to somebody who isn’t nicely knowledgeable in the true property enterprise,” she stated, earlier than calling the dearth of transparency about lead buyers the “Achilles’ heel” of the idea earlier than declaring herself out.
The Sharks fearful concerning the liquidity drawback going through small buyers.
“When grandma hears about crowdfunding, and the way all these new alternatives are actually obtainable to regular Individuals who wish to contact and really feel actual property, they put their final $1,000 in,” Cuban elaborated. “Then somebody will get sick, automotive breaks down, no matter it’s, they want liquidity. … They’ve none.”
Lori Greiner was equally uncomfortable with the idea, declaring, “I don’t like the thought of investing in actual property on-line with a bunch of different folks I don’t know. That appears to me dangerous and uncomfortable.”
O’Leary, seeing a possibility within the area regardless of his preliminary skepticism, made the one provide: $50,000 for 50% possession with a plan to rebrand the corporate beneath his identify.
“Tycoon means nothing to anyone. I do have a model, and I’ve a observe file of success,” he said, emphasizing his expertise managing investor cash.
He added: “I put my very own cash in each concept, l and I care quite a bit about my very own cash.”
McDaniel declined the provide.
In a subsequent interview with KF Model Studio, he defined his reasoning.
“I had privately acquired seed funding valued at 25 occasions the valuation of O’Leary’s provide,” he stated. “There was actually no approach I may settle for it and nonetheless be true and uphold my fiduciary tasks to my different buyers.”
Regardless of the rejection from the Sharks, TycoonRE skilled the well-known “Shark Tank impact” after the episode aired.
“Finally, we received hundreds of recent customers for our platform and lots of publicity for it,” McDaniel stated within the interview. The corporate’s web site crashed because of excessive site visitors following the published.
In a shocking flip of occasions, TycoonRE was acquired in November 2015 by a gaggle of 5 main crowdfunding platforms, together with American Home-owner Preservation, Patch of Land, and Peer Realty.
This made it the first-ever actual property crowdfunding platform to be acquired. “There’s a bigger consciousness of actual property crowdfunding because of the Shark Tank episode that includes Tycoon,” stated Jason Fritton, CEO of Patch of Land, in a press launch. “Though it didn’t prove nicely, now we have a possibility to set the file straight.”
The enterprise later rebranded as preREO, specializing in low cost mortgages and shopper investments. Nevertheless, the corporate’s fortunes finally dwindled. The preREO web site has been down for upkeep for a while, and its social media accounts haven’t been up to date since 2023.
In the meantime, McDaniel has moved on to higher success.
In line with Looper.com, he now teaches enterprise administration at UC Berkeley’s Haas Faculty of Enterprise and has based a number of companies which have since been acquired. He’s additionally written a Wall Road Journal bestselling e-book known as “International Class” and chairs the charity Create the Change, which connects children with native volunteering alternatives.
Regardless of the cruel reception on Shark Tank, McDaniel’s entrepreneurial journey continues to flourish, proving that typically rejection will be the start of even higher achievements.
And no jail time, as O’Leary predicted.