'Shark Tank' judge Kevin O'Leary reveals his worst deal that cost him $500,000: "What I did wrong..."

Among investors on "Shark Tank," Kevin O’Leary stands out for his keen observation and intimidating criticism, as well as some of the most emotional moments on air. Several start-up owners believe that having his investment in their company can significantly boost their chances of success. However, not everything he touches turns to gold and some bad investments cost him hundreds of thousands of dollars. In an interview with CNBC, the 70-year-old shed light on one of the biggest mistakes of his career.

The founder had impressed the veteran on “Shark Tank” and bagged an investment $250,000. However, O'Leary was least expecting a call only four months later asking for another chunk of money. “You put $250,000 on a deal. And then the guy calls you up four months later saying, ‘Look, I burned through all the cash. But, I know what I did wrong. I need another ($250,000),’” he said.

This was obviously not good news for the veteran investor who had put his trust in the company. He felt like it would be a mistake in his gut, lending him the money for the second time. However, he decided to take the entrepreneur’s word and invest another $250,000. And this time, it only took a couple of months before that entire sum was spent/ Needless to say O’Leary was plenty disappointed with himself.

“In my stomach, I didn’t feel right about it. My gut said ‘No.’ But because I knew the guy and I liked him, and he was a friend, and yada, yada, yada ... I gave him another [$250,000],” he said. “The lesson is: Listen to your gut, because that is your experience. You gain that over time. You can’t forecast it. You have to learn it." He had no money two months later. "So I lost half a million dollars,” O’Leary said. 

O’Leary has decades of experience as an investor and understands that bad deals are just a part of life. In fact, he expects most of the deals he makes to not be massive successes. “You make 10 investments, you get two to three huge hits. And it pays for the other seven,” he explained.

Some deals might go bad but the ones that go big are ones to be proud of. One such company that the 70-year-old invested in was Plated, a meal kit company. Initially, it was Mark Cuban who invested $500,000 in the company but had to drop out according to Money Digest. This gave O’Leary a unique opportunity even though he was a bit unsure about their business plan on “Shark Tank.”

However, there were conditions attached to his investment. Speaking on an episode of Barb “UNCORC’D”, he said that he did not want his share diluted since Plated got more investors on board in 2014. Therefore the veteran investor negotiated a “ratchet” with the company to make sure that his share was not diminished.

Three years later, Plated was bought by Albertson’s for a massive $300 million fee. It was a good deal for the founders of the company and O’Leary himself who pocketed $3.5 million with a 2.5% stake.