Sprinkle beef with salt and pepper. Melt 1 teaspoon butter in a large nonstick skillet over medium-high heat. Add beef to pan; cook 3 1/2 minutes on each side or until desired degree of doneness. Remove beef from pan; keep warm.
Melt remaining 1 teaspoon butter in pan. Add mushrooms, shallots, and garlic to pan; sauté 3 minutes. Stir in broth and sherry. Combine cornstarch and 2 teaspoons water in a bowl, stirring until smooth. Add cornstarch mixture to pan; bring to a boil. Cook 1 minute, stirring constantly.