‘I Smell Jail Time’: ‘Shark Tank’ Judges Slam Brakes on Contestant’s Shady Pitch After It Seemingly Takes a ‘Spooky’ Turn
Businessman Aaron McDaniel entered the “Shark Tank” with high hopes and a revolutionary concept: a real estate crowdfunding platform called Tycoon Real Estate that would allow everyday people to invest in property for as little as $1,000.
One of the guests on season 6, episode 16, was the former AT&T vice president. He sought $50,000 for a 5% stake in his company, promising returns “8 to 10 times” higher than traditional investments.
His pitch emphasized democratizing access to real estate investing, which has historically been “difficult, intimidating, and expensive.”
Considering two of the sharks, Kevin O’Leary and Barbara Corcoran, made their millions in real estate, he was sure to get an ear — and, unbeknownst to him, real informed pushback from the experts.
McDaniel assured the Sharks that all deals were professionally vetted, working only with top developers, and investors would get their money back if funding goals weren’t met.
“I hate it, I’m out,” Mark Cuban declared before McDaniel could even finish his presentation. The former Dallas Mavericks majority owner didn’t feel comfortable from the onset of his remarks.
O’Leary quickly followed with, “I smell jail time,” setting the tone for what would become one of the more contentious episodes in Shark Tank history.
The remaining Sharks weren’t much kinder. They grilled McDaniel about the legitimacy of his business model and the potential risks to uninformed investors.
Corcoran voiced concerns about the “mystery investor” behind each property.
“How do I know he’s got a good eye? How do I believe his projections? Spooky and frankly unfair to someone who isn’t well informed in the real estate business,” she said, before calling the lack of transparency about lead investors the “Achilles’ heel” of the concept before declaring herself out.
The Sharks worried about the liquidity problem facing small investors.
“When grandma hears about crowdfunding, and how all these new opportunities are now available to normal Americans who want to touch and feel real estate, they put their last $1,000 in,” Cuban elaborated. “Then someone gets sick, car breaks down, whatever it is, they need liquidity. … They have none.”
Lori Greiner was equally uncomfortable with the concept, declaring, “I don’t like the idea of investing in real estate online with a bunch of other people I don’t know. That seems to me risky and uncomfortable.”
O’Leary, seeing an opportunity in the space despite his initial skepticism, made the only offer: $50,000 for 50% ownership with a plan to rebrand the company under his name.
“Tycoon means nothing to anybody. I do have a brand, and I have a track record of success,” he stated, emphasizing his experience managing investor money.
He added: “I put my own money in every idea, l and I care a lot about my own money.”
McDaniel declined the offer.
In a subsequent interview with KF Brand Studio, he explained his reasoning.
“I had privately received seed funding valued at 25 times the valuation of O’Leary’s offer,” he said. “There was really no way I could accept it and still be true and uphold my fiduciary responsibilities to my other investors.”
Despite the rejection from the Sharks, TycoonRE experienced the famous “Shark Tank effect” after the episode aired.
“Ultimately, we got thousands of new users for our platform and a lot of publicity for it,” McDaniel said in the interview. The company’s website crashed due to high traffic following the broadcast.
In a surprising turn of events, TycoonRE was acquired in November 2015 by a group of five major crowdfunding platforms, including American Homeowner Preservation, Patch of Land, and Peer Realty.
This made it the first-ever real estate crowdfunding platform to be acquired. “There is a larger awareness of real estate crowdfunding thanks to the Shark Tank episode featuring Tycoon,” said Jason Fritton, CEO of Patch of Land, in a press release. “Although it didn’t turn out well, we have an opportunity to set the record straight.”
The venture later rebranded as preREO, focusing on discount mortgages and consumer investments. However, the company’s fortunes eventually dwindled. The preREO website has been down for maintenance for some time, and its social media accounts haven’t been updated since 2023.
Meanwhile, McDaniel has moved on to greater success.
According to Looper.com, he now teaches business administration at UC Berkeley’s Haas School of Business and has founded several businesses that have since been acquired. He’s also written a Wall Street Journal bestselling book called “Global Class” and chairs the charity Create the Change, which connects kids with local volunteering opportunities.
Despite the harsh reception on Shark Tank, McDaniel’s entrepreneurial journey continues to flourish, proving that sometimes rejection can be the beginning of even greater achievements.
And no jail time, as O’Leary predicted.