also had a surprise revelation when investing in women owned companies.
Shark Tank’s Kevin O’Leary Prefers Investing With Women. Here’s Why.
By Jack Otter
June 21, 2019 7:29 pm ET
https://www.barrons.com/articles/shark-tanks-kevin-oleary-invests-only-with-women-heres-why-51561159764
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“I’d give money to a goat if I could get a return,” says Kevin O’Leary, “I really don’t care.” An investor best known for playing the tough guy on a panel full of tough characters on the reality venture-capital show Shark Tank, O’Leary is making the point that he has no political or social agenda. He’s all about capitalism.
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So it is surprising, to say the least, that O’Leary invests almost exclusively in companies founded and run by women. That approach sounds an awful lot like “gender lens” investing, a subset of ESG that aims to boost returns by investing in companies with female leadership, or that are dedicated to improving women’s lives. (For more on this, see “Improving Women’s Issues Leads to Better Investment Returns.”) O’Leary, who ran for prime minister of Canada on the conservative line, doesn’t come off like a gender-lens investing kind of guy. But he is adamant: After taking stakes in 39 companies through Shark Tank, he has gotten significantly better returns from start-ups founded and run by women. And he doesn’t think it’s a coincidence.
The single most important factor in the outperformance of female entrepreneurs, O’Leary says, is their tendency to set reasonable goals for growth. Men, he says, often set “testosterone targets, crazy goals that they only hit 60% of the time.” There are many benefits to setting achievable goals, including cash management—when your growth assumptions are accurate, you can manage your cash flow properly. If growth comes in far below assumptions, you might run out of money before you’re generating enough to cover costs.
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Studies have suggested that gender diversity in the C-suite and on corporate boards leads to better performance. Among other things, research has shown a correlation between gender diversity on corporate boards and lower volatility. And one theory with some, but not unanimous, scientific basis posits that women tend to be more risk-averse. That hypothesis strikes a cord with O’Leary, who wants a hedge against the inherently risky proposition of funding start-ups.
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