March 28, 2022 | 2-minute read (295 words)
University of Lyon professors Laurent Vilanova and Ivana Vitanova conducted a study, published in the Academy of Management, that examined how an entrepreneur's level of humility affected venture capitalists' willingness to support their business venture.
"Early-stage investors perceive that humble entrepreneurs have higher constructive qualities and are more compatible with investors than non-humble entrepreneurs,” the professors wrote. “Expressed humility has an overall positive effect on investors' evaluations of the venture's likelihood of success and their willingness to support the venture.”
To recap the study, entrepreneurs who did not exhibit humility were seen as overconfident, arrogant and stubborn by more than 50 venture capitalists. These are not attributes an investor finds desirable when considering whether to fund a venture. VCs were 1.7 times more likely to make an investment offer to the entrepreneurs perceived as modest versus their more aggressive counterparts.
"We found that VCs perceive humble entrepreneurs to have more constructive qualities, to be more coachable and are more likely to click with the investors, who will spend countless hours shaping the next steps of these early-phase companies," Vilanova told The Wall Street Journal.
It's OK to express doubt
The authors discovered that entrepreneurs who expressed their doubts could boost their odds of investment. Rather than risk sounding overconfident, Vilanova and Vitanova advise saying something like, "We do believe we have a good project. However, there are things that we need to address."
Furthermore, entrepreneurs should refrain from acting overconfident and saying things like, "[W]hile I appreciate the opinions of others, in most cases, I prefer to follow my gut." In other words, VCs prefer to work with entrepreneurs that have high aspirations, but they assume that ambition in the absence of humility “is a sign of arrogance, overconfidence and stubbornness," Vilanova said.