Why Do Women Entrepreneurs Tend to Receive Less Investor Money?

A new study by led by Sharon Poczter, an assistant professor of applied economics and management at Cornell University, suggests that women may receive less in venture capital financing simply because they ask for less money from investors.

The authors examined nearly 500 pitches made by aspiring entrepreneurs on the television show Shark Tank. They found that women who were funded by the show’s “angel” investors received on average about one half the money for their start-up ventures as men who were funded on the show. The main reason was because women tended to ask for lower levels of financing. The Cornell University study found that women who asked for more money to finance their projects were just as likely to receive the same funding level requested by male entrepreneurs.

Dr. Poczter states that “the strong takeaway for female entrepreneurs is: don’t undervalue yourself. When considering the valuation of your company, think about potentially increasing how much you’re asking for. Asking for more will not impede success in getting a deal. Asking for more is something very straightforward that women can do. Our results suggest getting access to more financing is not going to take an institutional reconstruction.”

Dr. Poczter is a graduate of Cornell University. She holds a master’s degree and a doctorate from the Haas School of Business at the University of California, Berkeley.

The study, “Know Your Worth: Angel Financing of Female Entrepreneurial Ventures,” was co-authored by Melanie Shapsis, a 2016 graduate of Cornell. It is available through the Social Science Research Network and may be downloaded by clicking here.