Women entrepreneurs face fund discrimination
The real war on women is being waged by loan officers and capital investors, a group of successful female entrepreneurs told a Senate panel Wednesday.
People are twice as likely to invest in a startup pitched by a man than by a woman, resulting in fewer women starting small businesses, said Barbara Corcoran, a New York City real estate mogul who now invests in startups on the ABC TV show “Shark Tank.”
Ms. Corcoran was among female entrepreneurs testifying before the Senate Small Business and Entrepreneurship Committee about how to level the playing field and ensure women get equal help starting a business.
While sex discrimination in loan-giving already is illegal, other perceptions about businesswomen may be more difficult to change and are contributing to financing gaps, they said.
A Harvard Business School study showed a group of people two pitches. While the words and images shown were identical, one was narrated by a man and the other was narrated by a woman. About 68 percent of investors chose to back the man, while only 32 percent chose to fund the woman’s pitch.
“The men used the exact same words; it was just a matter of who was delivering,” said Sen. Maria Cantwell, Washington Democrat and the panel chairwoman.
“We want to make sure we flatten these barriers,” said Ms. Cantwell, who was a wealthy software investor before being elected.
Ms. Corcoran said she began her career as a waitress, where a customer said she had the kind of personality that would thrive in real estate and gave her a $1,000 loan. Other than her first loan, Ms. Corcoran struggled to secure investments in a male-dominated field where many came from successful families.
“I found it enormously difficult to compete with the men,” she said. “I found it particularly difficult when I tried to grow my business, because I had no access to cash while the men had easy access to whatever capital they needed to continue to grow and compete with each other.”
Despite the difficulties, Ms. Corcoran eventually sold her company for $66 million.
“Shark Tank” involves entrepreneurs with new ideas or products pitching a panel of five “sharks” to get them to invest in their business. While many go home empty-handed, the investors will outbid each other for some of the best ideas, offering both their capital and their experience to the startup founders.
Ms. Corcoran said the male investors on “Shark Tank” usually only invest in “cute, well-endowed” women. In fact, she said she’s not even sure if the men are paying attention to the business numbers when a woman is pitching.
“I automatically know, when a woman walks on to the set, she only has a 50 percent chance of getting money from those guys,” she said.
She also added that men often can’t relate to products women pitch that have to do with families or children.
Most weeks, the panel of investors on “Shark Tank” includes Ms. Corcoran and four men: Mark Cuban, the owner of the Dallas Mavericks; Robert Herjavec, a technology executive who owns his own private island; Daymond John, who created the FUBU clothing line; and Kevin O’Leary, who works in educational software.
In the last season, Lori Greiner, a QVC personality with 120 patents, joined the show occasionally, replacing one of the men.
Ms. Corcoran was seemingly starstruck in her visit to Capitol Hill, beginning her remarks by saying, “I’ve never seen a real senator before.” She went on to ask if she could take one of the paper coasters on the witness table that said “U.S. Senate.”
Sen. Benjamin L. Cardin, Maryland Democrat, replied with a laugh that “budgets are tight.”