Charisma in entrepreneurial pitching
We examine the role of charisma in influencing angel investor decisions. Given that new ventures are often at an early stage of development, all relevant objective and factual information about the quality of the venture and its performance are often unavailable. Therefore, prior literature suggests that angel investors focus on the entrepreneur, their characteristics, and other informational signals when evaluating a new venture. The manner in which entrepreneurs communicate information about their ventures during pitch presentations is purported to have a significant impact on investment decisions. We examine whether charismatic signaling influences the likelihood of receiving funding in a controlled setting by employing an objective measure of charisma. Using transcripts from Shark Tank episodes from 2009 to 2021, we find that charisma is positively associated with the likelihood of attracting funding from angel investors after partialling out all relevant observable factors expected to affect investment decisions. Additional analyses examining the role of gender suggests that the effect of charisma is the same regardless of the sex of the entrepreneur. The findings are robust when using alternative methods to correct for measurement error. The findings contribute to our understanding of the role of charisma in the context of entrepreneurial financing and they have important practical implications for entrepreneurs determined to secure funding for their new ventures.