When looking at a potential deal, Shark Tank investor and River City Labs founder Steve Baxter believes it’s about three things: the skills, the problem, and the idea.
“It boils down to the same thing for each deal. It’s about the people and their skills, what problem they’re solving, and how they’re going to solve it,” Baxter told StartupSmart.
“My focus is on, can I work with them? And ‘do they have the skills to pull it off’?”
Known as the tech-head among the sharks, Baxter notes he doesn’t get much opportunity to flex his technological know-how on the Network Ten show, with the majority of businesses coming through being aimed towards fast moving consumer goods and physical products.
Despite this, he’s excited about the recent wrap of season three, which this year has some “pretty big deals” from over 90 entrepreneurs who entered the tank.
Baxter hints that he’ll be going at it alone for the most part this season, declaring himself a “bit of a lone wolf in that respect” and preferring early-stage investments to be solo deals, while group investments are too risky.
“It’s easier to get divorced than lose an investor, and every extra investor in a business doubles the risk. You have to be really careful,” he says.
“I have a professional office where I use a more systematic approach to completing deals, so I prefer to do deals alongside other people outside of Shark Tank.”
Some of Baxter’s favourite deals he’s locked down over his three Shark Tank seasons include car-renting startup Car Next Door, and drinks brand Sofi Spritz, which Baxter says has done “quite well” despite the difficult industry of alcoholic beverages.
Looking to the future of technology developments in Australia, Baxter is expecting “more of the same”, believing the next five years will be inundated with blockchain, artificial intelligence, and machine learning startups. While these are “no doubt relevant”, Baxter’s focus is elsewhere.
“Consumer trends are getting a lot more interesting, especially in the media space with the huge shift to online media consumption and how we determine that ecosystem,” he says.
Although he notes it’s “exceptionally valued”, Baxter is not big on the blockchain, calling it “overhyped” and a “bit annoying”.
“It’s either blockchain or artificial intelligence, and it’s getting a bit annoying,” he says.
“I’ve got no blockchain startups in my portfolio, and I’m not in a hurry to find any.”
For ambitious startups hoping to one day swim with the sharks, Baxter recommends you make sure you’re solving a problem people care about being solved.
“There’s always a problem, but does it need to be solved?” he says.
“You can use NFC to code the blockchain via artificial intelligence to open your front door for you. That does work, but who gives a stuff?”