Success Lies in the Eye of the Beholder: Personality Traits, Negativity Bias and Equity Crowdfunding

Expressed personality traits can play a pivotal role in shaping how the entrepreneurs' narratives are perceived by investors. Using a sample of 709 campaigns collected from four leading US-based equity crowdfunding websites and enriched with corresponding pitch videos and S.E.C. data, this study investigates the relationship between personality traits signaled by entrepreneurs to investors and subsequent funding success of equity crowdfunding campaigns. Of the Big Five personality traits, in particular, we find that higher conscientiousness, lower neuroticism, extraversion, and surprisingly lower openness seem to serve as signals of equity crowdfunding success, significantly affecting both the funding amount received and the number of investors attracted by campaigns. Moreover, we find that the information volume of a given campaign amplifies the negative effect of perceived neuroticism on funding success, suggesting a role for negativity bias. Partly challenging conventional wisdom, this study extends the literature on the relationship between personality and entrepreneurial finance by providing new input to a longstanding and central debate on the impact of individual-level components upon entrepreneurial outcomes in the underexplored alternative finance market and by demonstrating the context-dependent nature of personality signals within their respective investment contexts.