New research has suggested that entrepreneurs who display the right level of narcissism are more likely to secure crowdfunding investment.
According to the findings from Trinity Business School, entrepreneurs who exhibit medium levels of narcissistic expression in their crowdfunding campaigns secure more money from investors.
The study, which examined 338 equity-crowdfunding campaigns conducted on the two main crowdfunding platforms in the UK, evaluated the impact of the "dark triad" personalities on crowdfunding success.
The dark triad comprises of three personality traits: narcissism, Machiavellianism and psychopathy. Narcissism is characterised by grandiosity, egotism and a lack of empathy; Machiavellianism, by behaviour characterised by manipulation, exploitation, a lack of morality and self-interest; and psychopathy is characterised by continuing antisocial behaviour, impulsiveness, selfishness and remorselessness.
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Dr Francesca Di Pietro, assistant professor at Trinity Business School, looked at the impact of these traits on entrepreneurs’ ability to successfully obtain equity crowdfunding – in which people invest in a company in return for shares in that firm – because this type of financing sees investors become shareholders and so often these individuals have a higher interest in the future value of the start-up.
The study revealed that, while Machiavellianism in crowdfunding pitches has no effect on financing success, entrepreneurs who display traits of psychopathy lower their chances of securing investment.
Similarly, entrepreneurs who exhibited either extremely low or high levels of narcissism in their funding campaigns secured less investment than those who demonstrated a medium degree of narcissistic behaviour.
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“Narcissists attract investment and gain support using two mechanisms: a persuasive effect, and a commitment effect," Ms Di Pietro said.
"Narcissists employ rhetoric to persuade, influence and mobilize others, and often do so in a spontaneous and encouraging manner. Similarly, they demonstrate commitment and work hard to reach to their goals, which is displayed in their expressions and is easily understood by investors.
“However, in both cases, these effects reach a turning point where, if narcissism levels are too high, they can actively discourage investment, whether that be through dishonest behaviour and unreliability when trying to be too persuasive, or even rude and aggressive due to being excessively committed.”
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