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UNH research finds angel investors influenced by ego

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Jeffrey Sohl, UNH’s Center for Venture Research

DURHAM, NH – Angel investors—wealthy individuals who provide essential funds for start-ups—often invest under conditions of extreme uncertainty. While their funds can be vital to early-stage ventures, researchers at the University of NH in Durham found that angels’ egos can play a significant role in their investment decisions—the bigger the ego, the larger and more diverse the deal and the lower the number of co-investors.

“Our research focused on the theory of ‘threatened egotism,’ which states that highly narcissistic people—those with excessive self-love—can have vulnerable egos that are fragile and need to be fed with risky and aggressive investment behavior,” says Jeffrey Sohl, professor of entrepreneurship and decision sciences and director of UNH’s Center for Venture Research. “Any negative feedback on those investments can motivate angel investors to calibrate their future investment behavior, engaging in even larger deals and a higher level of portfolio diversification.”

In their study, recently published in the Journal of Business Venturing, the researchers looked at the effect of narcissism on angel investment behaviors and past investment performance of 133 angels from 2010 to 2019. They focused on three different types of investment behaviors: deal size, portfolio industry diversification and number of co-investors. They also looked at low past investment performance as a motivator for narcissistic individuals because it can pose a threat to one’s ego leading them to engage in more aggressive behaviors.

“This is the first study of its kind to highlight the prominent role of narcissism in angel investing and demonstrates that its significance can explain the shift in their investment behaviors,” says Jianhong Chen, associate professor of strategic management and entrepreneurship and associate director of the center. “We feel our work could help enhance and enrich the psychological foundation of angel investing.”

Click here to access the study.


These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org. 


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Matthew J. Mowry

EditorBusiness NH Magazine

Matthew Mowry is Editor of Business NH Magazine.

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