Why flaws can pay: entrepreneurs need not seem perfect in seeking investors

University of Cambridge Judge Business School — 15 September 2022

Entrepreneurs who expose flaws like insecurity can boost investment by attracting investors with similar flaws.

The stereotype of an entrepreneur’s elevator pitch for investment calls for a perfect presentation by a polished and prepared performer. Yet some of the most successful company founders – think of Richard Branson and Bill Gates – have in fact come across as nervous and somewhat nerdy, and certainly far from flawless.

A new study co-authored by Prof. Dr. Jochen Menges and Prof. Dr. Lauren Howe that just won a top award from the Academy of Management helps explain why.

The study identifies how entrepreneurs who expose their own flaws can increase funding for their ventures by attracting similarly flawed investors, who include angel investors and people contributing to crowdfunding efforts.