Entrepreneur Enthusiasm & Trustworthiness

Richard Sudek wrote an interesting article in 2007 on  “How Entrepreneur Enthusiasm, Trustworthiness and Venture Attributes Affect Angel Investment Decision Processes”. Dissertation – Claremont Graduate University

This is an interesting topic for me, because I believe trust is the currency of business. I wrote a blog on the topic. A key learning for me after 11 years at yet2.com is people are more important than technology in deal-making.   This study supports that view.

This article is a dissertation of 121 pages including survey results from other scholars. The author points out that entrepreneur’s enthusiasm and trustworthiness are placed as top criteria used by angels in their funding decision. Sudek emphasizes the importance of trustworthiness for the success of the entrepreneur. Whether an angel likes the entrepreneur is also very important. Sudek comments that the entrepreneur is the most significant factor that influences angels and VC’s to finance the new venture.

The author also considered age, gender and experience of the entrepreneur as potential factors that can influence finding decisions, but he didn’t find significant trends and correlations.

Factors for successful business pitches:

 Enthusiasm and passion of the entrepreneur (coupled with extraversion)

 Trustworthiness of the entrepreneur

 Entrepreneurs demonstrate ability to manage the new venture

 Entrepreneurs demonstrate that there is a market need for their product

 The entrepreneur demonstrates expertise

 Entrepreneurs are skillful in ingratiating themselves during meetings with VC’s

 Entrepreneur conveys honesty in his/her presentation

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One Response to Entrepreneur Enthusiasm & Trustworthiness

  1. Tom Marcin says:

    Having started up 3 companies and advised several others, my experience is that one must be careful that enthusiasm doesn’t come off as blinded euphoria. Of the two, I give much more credence to Trustworthiness. As a matter of fact, sometimes over-enthusiastic entrepreneurs come off as used car salesman, which is the antithesis of trustworthiness. A fine line to walk, which many novice entrepreneurs have not yet mastered.

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