For many companies, whether it's one that produces an app or book lamps, a path has already been blazed for how much they're worth. Tech companies generally have a higher potential valuation than consumer products -- things like The Sleep Styler cost money to produce and require kept inventory. There are supply-chain issues to worry about, and manufacturing costs can go up without warning. On the tech side of things, an app like Instagram doesn't have to worry about any of those old-school business problems. It famously sold to Facebook for a billion at a time when it had just 13 employees.
But if you think that post-valuation the company's founders are suddenly swimming in McDuck-like pits of gold coins, think again. "In a practical sense, it doesn't change anything," Cohen says. It does, however, give the company's founders an idea of how much money they'll make if they eventually sell. Which, for many startups, is the endgame of all this. Finding an investor on Shark Tank isn't the goal for these companies -- it's the beginning of a long journey. What comes next, hopefully, are huge jumps in sales, followed by one big sale. Like Shark Tank alumnus Groovebook, which sold for $14.5 million to Shutterfly.