Pitch imperfect: How investors respond to entrepreneur disclosure of personal flaws

Published in: Organizational Behavior and Human Decision Processes — January 2025

Written by

Lauren C. Howe and Jochen I. Menges

Summary

What we found: We found that disclosing certain types of flaws—specifically agency-deficit flaws—can lead to psychological closeness and increase investment, but only when investors share the same flaw. In contrast, disclosing agency-excess flaws does not foster closeness or investment, even when shared.

Why it matters: These findings reveal that not all flaw disclosures are equal; the type of flaw and its relevance to the investor significantly influence investment decisions. This challenges the assumption that vulnerability or similarity always builds trust or rapport in entrepreneurial pitches.

What next: Entrepreneurs and leaders should strategically consider the type of flaws they disclose, focusing on authentic but relatable weaknesses that may resonate with their audience. Organizations supporting startups can train founders to navigate self-disclosure wisely, maximizing connection without undermining credibility.

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