Know Your Worth: Angel Financing of Female Entrepreneurial Ventures

Abstract

This study explores success rates in angel financing based on the gender composition of entrepreneurial teams using unique, hand-collected data from the television program Shark Tank. We find that the likelihood of a team receiving an offer from an angel investor is independent of the entrepreneurs’ gender and initial asking valuation. However, consistent with prior work, we find that female teams receive lower company valuations and less capital to finance their new ventures relative to their male counterparts and that this differential valuation depends on industry. We also discover, however, that female teams receive less funding because they initially ask for significantly lower valuations for their companies, ceteris paribus. These results hold when controlling for important entrepreneur and firm characteristics that may strongly impact the angel financing outcome, such as the size of the entrepreneurial team, company age and prior success of the firm.

Keywords: angel financing, gender differences, financing sources, start-up capital, new firms

JEL Classification: J16, L26, M13