Let's get this straight: These people watched a lot of Shark Tank. To be exact: 495 pitches.
The newly minted Shark Tank addicts were two Cornell professors and their research assistants. The goal was not to glean pearls of wisdom from Mark Cuban or any of the other sharks, although that would have been an interesting project. Instead, the researchers wanted to figure out if male and female entrepreneurs did equally well on the show.
In the venture capital world, women CEOs receive less than four percent of funding. This has often been blamed at least partially on the fact that about 95 percent of venture capitalists are men, and that they like to invest in people who resemble previously successful entrepreneurs, or at the very least resemble themselves. Another problem is that a male investor may not fully understand or appreciate the potential of a product, service, or idea that is meant to appeal primarily to women.
And during Shark Tank's run, the vast majority of so-called sharks--the investors--have been men.
How'd the women do?
Of the 495 teams analyzed for the study, 60 percent were all-male teams, 26 percent were all-female teams, and 14 percent were from mixed-gender teams. It turns out that men and women are equally likely to get a deal on the show. How much of that is due to shark Kevin O'Leary claiming that the women entrepreneurs in his portfolio are outperforming the men? We'll never know, but at any rate, plaudits to the sharks on that one.
The flip side is that women get less money on Shark Tank than men do, and they raise that money at lower valuations.
On average, according to the study, a Shark Tank deal includes a $272,000 investment in return for a 32 percent equity stake. The average valuation is $1.3 million. On average, a successful team ends up accepting a valuation that is about 63 percent of their initial asking valuation. Of the teams that receive offers, 18 percent reject them. That's regardless of gender.
But when the researchers compared the men with the women, and made sure they were matched against other entrepreneurs in their same industry, they found that all-female teams received valuations $685,000 below those of the all-male teams, on average. Overall, all-female teams accepted valuations averaging $827,454, while all-male teams got valuations of, on average, $1,450,838.
When it comes to the amount raised, women got significantly less as well. The average all-female team raised $197,232. The average all-male team raised $318,000.
This is despite the fact that the all-female teams generally had twice as much in revenues, and twice as much personal capital invested, as the all-male teams. The paper says the fact that the all-female teams appeared to be doing better than the all-male teams wasn't statistically significant. But there certainly is no evidence that the all-female teams were doing worse than the guys, and not reason, based in the company's finances or the industries they were in, that the women should be getting less money.
So why are they getting less? If you're a woman raising money and reading this, the answer is probably going to be equally parts frustrating and infuriating: The women asked for less.
The women asked, initially, for $159,906. They guys asked for $320,253.
The women may have thought that asking for less would increase their chances of getting a deal done, but the researchers found that there was no connection between how much an entrepreneur asked for (either in valuation or the amount invested) and their likelihood of getting an investment.
It's clear that Shark Tank isn't like every other investing environment, for the obvious reason that the sharks can cooperate with each other (or not) and hey, it's on tv. Still: Don't ask, don't get.