From ego to equity: exploring the influence of narcissism and gender on start-up funding success

Abstract

Purpose

This study aims to investigate the association between narcissistic tendencies, gender and funding success in high-growth start-ups. It aims to bridge a critical research gap by exploring the combined effect of gender and narcissism on start-up funding success.

Design/methodology/approach

The authors surveyed 540 founders of high-growth start-ups in Germany, Austria and Switzerland, using the NPI-16 questionnaire to assess narcissistic tendencies. By focusing on high-growth start-ups as opposed to small firms, the authors enhanced the validity of the sample. This study isolates and analyses the effects of gender and narcissism, providing insights into their individual and combined contributions to start-up funding success.

Findings

The findings reveal that gender is associated with lower start-up funding and lower narcissistic tendencies. This highlights the intricate relationship between gender, narcissism and funding success within the context of high-growth start-ups.

Practical implications

These findings have important implications for investors, policymakers and entrepreneurial educators, suggesting that a nuanced understanding of founders’ psychological traits could enhance funding strategies and start-up support mechanisms.

Originality/value

This research addresses the critical gap in the literature by examining the joint influence of gender and narcissism on funding success in high-growth start-ups. The study contributes to a nuanced understanding of the factors shaping founder psychology and performance dynamics, offering valuable insights for future research in gender, narcissism and start-up success.

Citation

Burger, B., Kraus, S., Maran, T.K. and Kanbach, D.K. (2024), "From ego to equity: exploring the influence of narcissism and gender on start-up funding success", Journal of Enterprising Communities: People and Places in the Global Economy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEC-11-2023-0209

Introduction

Narcissism in leadership has a significant impact on organisations (Chatterjee and Hambrick, 2007; Cragun et al., 2020). Management narcissism research has recently shifted from examining isolated effects to holistic outcomes (Grijalva et al., 2020). This shift has relevance to entrepreneurship research, where performance metrics often tie in with the funding success of the founders. Additionally, the role of female entrepreneurs has gained increased attention (Leonelli, 2021). The association between narcissism and gender in the context of entrepreneurial success has emerged as a crucial area of inquiry. While narcissism has been associated with certain leadership qualities such as confidence and charisma, its manifestation and impact may vary significantly across genders (Harms et al., 2020; Hmieleski and Sheppard, 2019; Murzacheva et al., 2020). The divergent social expectations and norms related to gender may shape the expression of narcissistic tendencies, thereby influencing entrepreneurial behaviour and success outcomes. Our study seeks to unravel this complex association, providing novel insights into how gender and narcissism jointly contribute to start-up success.

In this paper, we aim to address Leonelli’s (2021) call to examine the association between gender, success and narcissism in entrepreneurship. We also respond to Cragun et al.’s (2020) call to consider both gender and diversity in the study of funding success to identify the reason for the observed gender funding gap in venture capital (VC) (Kanze et al., 2018). Our focus is on the impact of narcissistic tendencies on entrepreneurial outcomes. Previous research has demonstrated that individuals with high levels of narcissism tend to surround themselves with similarly narcissistic individuals (Chatterjee and Pollock, 2017). Thus, we aim to model the influence of narcissism on funding success moderated by gender.

To achieve this goal, we surveyed start-up founder teams in the DACH region (Germany, Austria and Switzerland) using the Narcissistic Personality Inventory (NPI-16) questionnaire (R. N. Raskin and Hall, 1979). The sample comprised high-growth start-ups from German-speaking European countries that were identified through leading accelerators and LinkedIn. Combining data from LinkedIn and Crunchbase on the participating companies, we used established statistical models (Chatterjee and Hambrick, 2011) to test our hypotheses.

Our sample is limited to founders of high-growth, externally funded start-ups, defined as companies primarily focused on growth rather than profitability. We compare our findings to prior research and the NPI scores of the general population.

This study significantly contributes to the burgeoning field of entrepreneurship research, particularly in understanding the complex association between narcissism and gender.

By isolating the effects of gender and narcissism on start-up success, this research transcends the traditional boundaries between studies focused on narcissism in entrepreneurship (e.g. Hmieleski and Sheppard, 2019) and gender in entrepreneurship (e.g. Murzacheva et al., 2020). It offers an integrated perspective that enhances both research streams, revealing insights without overlap.

Our innovative research protocol, including data collection and rigorous statistical analysis, sets a new standard for studying entrepreneurship’s psychological traits. By using validated measures and robust analytical techniques, we ensure the validity and reliability of our findings, aligning with and extending current methodological best practices.

Beyond the empirical findings, our study elucidates theoretical pathways connecting narcissism, gender and entrepreneurial success (Gomes et al., 2022; Latifi et al., 2022; Ramadani et al., 2022). These theoretical contributions provide a scaffold for future research, bridging diverse research lines and offering a comprehensive framework. Moreover, the practical implications of our research extend to start-up founders, investors and policymakers, informing strategies to foster diversity and enhance performance in the entrepreneurial ecosystem.

Theoretical foundations

Subclinical narcissism, distinct from narcissistic personality disorder (NPD), represents a pattern of behaviours and attitudes that can be seen in otherwise normal individuals. It encompasses traits such as an inflated sense of identity and self-worth, increased intrinsic motivation and reduced empathy, without reaching the pathological threshold defined by the ICD or DSM-5 (Furnham et al., 2013; Muris et al., 2017; Paulhus and Williams, 2002).

In the realm of entrepreneurship, these narcissistic tendencies can manifest in various ways, both advantageous and detrimental. The evolutionary roots of narcissism reveal a functional aspect, where narcissistic behaviours may have evolved to secure short-term approval and advantages (Furtner et al., 2017; Jonason et al., 2010). In the early stages of a company’s lifecycle, particularly during fundraising, narcissistic tendencies can enhance the “selling” of an entrepreneurial vision, with potential benefits (Byrne and Worthy, 2013). However, narcissists’ charm may be transient, effective “at first glance” but potentially leading to long-term issues such as lowered moral or unethical behaviour (Back et al., 2010).

In management research, the NPI is a widely used tool that correlates with narcissism based on the clinical DSM-5 definition (Raskin and Hall, 1981; Raskin and Hall, 1979). In our study, we use the term “narcissistic tendency” to denote varying degrees of NPI without implying clinical narcissism. This perspective aligns with recent insights into how narcissists may succeed in their ecosystems, such as with stakeholders, customers or investors, through effective idea-selling and risk-taking (Anglin et al., 2018).

This nuanced understanding of narcissism, grounded in personality psychology and behavioural biology, informs our investigation of the association between narcissistic tendencies, gender and entrepreneurial success. By drawing on these theoretical foundations, our study aims to illuminate the multifaceted role of narcissism in entrepreneurship, contributing to both academic discourse and practical applications.

In recent years, the concept of narcissism in entrepreneurship often expands to the dark triad, which has numerous effects on managing an organisation (Kraus et al., 2020). In our study, we limit on narcissistic tendencies as these are more focused and allow us to isolate effects of personality more clearly.

Previous studies have shown that narcissistic tendencies have distinct effects at every stage of the entrepreneurial journey. Entrepreneurial intention refers to all planning and execution activities before creating an organisation, formal or informal. Narcissistic tendencies increase the probability of an individual starting an entrepreneurial endeavour and pushing through the intention stage (Kramer et al., 2011; Tucker et al., 2016). Entrepreneurial activity encompasses all activities during the existence of an entrepreneurial organisation, such as product development, business development and organisation building. In this study, the entrepreneurial organisation will always be a start-up. In this environment, narcissistic tendencies can provide a competitive advantage in the early stages when the founder’s productive work contributes dramatically to the organisation’s output (Presenza et al., 2020).

Narcissism as a personality trait plays a multifaceted role in the domain of entrepreneurship. While it can serve as a driving force in the early stages (pre-seed through Series A), empowering entrepreneurs with confidence and charisma, its effects can vary as the entrepreneurial journey progresses (Hintikka et al., 2023; Bollaert et al., 2020) shed light on the influence of entrepreneurs’ narcissism in the realm of crowdfunding, delineating the ego-defensive and grandiose/arrogant behaviours of narcissists. Interestingly, more narcissistic crowdfunding entrepreneurs tend to set less ambitious goals and longer campaign durations, a manifestation of their ego-defensive tendencies. Furthermore, their campaigns are often less successful, suggesting that potential negatively perceive their narcissistic tendencies.

The team dynamics in entrepreneurial settings also offer intriguing insights into the role of narcissism. Kollmann et al. (2019) delved into the self-regulatory processing model of narcissism, hypothesising a positive relationship between narcissism, task conflict and business planning within teams. The study reveals that this relationship is amplified by team narcissism, especially when aligned with entrepreneurial capabilities.

Darker shades of personality traits in entrepreneurship were explored by Hmieleski and Lerner (2016), who examined the dark triad (narcissism, psychopathy and Machiavellianism) in relation to entrepreneurial intentions and motives. While narcissism was found to correlate positively with entrepreneurial intentions (Leung et al., 2021), all facets of the dark triad were associated with unproductive entrepreneurial motives; this underscores the dual-edged nature of these traits in entrepreneurial contexts.

However, as Owens et al. (Owens et al., 2015) suggested, the benefits of narcissistic tendencies might diminish in later stages of entrepreneurship, especially when leadership becomes paramount. The performance of entrepreneurial organisations – entrepreneurial performance as proxied by funding success – as a culmination of various outcomes, including the ability to learn in the market (Wu et al., 2022), presents a nuanced picture regarding the benefits of narcissism. While there is an ongoing debate (Navis and Ozbek, 2017), it is undeniable that a founder’s narcissism can deeply affect the start-up, with potential long-term implications (Burger et al., 2023; Galvin et al., 2015).

Gender plays a pivotal role in the domain of entrepreneurship, influencing not only entrepreneurial activities but also the perceptions, challenges and successes associated with it. Sullivan and Meek (2012) provided a comprehensive review of gender and entrepreneurship literature, presenting a process model to guide future research. The study underscores how societal attributions and socialisation processes might create barriers for women in entrepreneurship, giving rise to the metaphorical “glass ceiling” that many women face in this domain.

Historically, research on gender differences in entrepreneurship has been fragmented and largely atheoretical. Fischer et al. (1993) emphasised the need for integrative frameworks, introducing perspectives of liberal feminism and social feminism. The liberal feminist perspective suggests that women face overt discrimination or systemic factors depriving them of vital resources, whereas the social feminist perspective posits inherent differences due to socialisation but stresses that these differences do not necessarily imply inferiority. This theoretical foundation has been instrumental in shaping the discourse on gender in entrepreneurship.

The landscape of gender in entrepreneurship has witnessed a shift over the years. Malach‐Pines and Schwartz (2008) created the attraction-selection-attrition (ASA) model, suggesting that while there are few gender differences in entrepreneurial traits and values, societal factors significantly shape women’s entrepreneurial journeys. Recent findings, as highlighted by Henry et al. (2015), have indicated that while research on women and entrepreneurship has burgeoned, a myriad of questions remain to be explored, especially regarding the gender gap in access to resources and success metrics.

Several empirical studies have delved into the intricacies of gender in entrepreneurship. Guzman and Kacperczyk (2019) found that female-led ventures are less likely to obtain external funding, especially in the context of crowdfunding. Zhang et al. (2009) provided evidence for genetic influences on the tendency to become an entrepreneur and found gender differences in these influences.

When it comes to funding, the gender gap is evident. Research by Gicheva and Link (2015) suggests that while women entrepreneurs face challenges in accessing private investment, gender differences in entrepreneurial perceptions play a crucial role (Agarwal et al., 2022; Nigam et al., 2022). Mohammadi and Shafi (2018) explore the behaviour of investors, indicating that female investors are less likely to invest in ventures with certain risk profiles. Li et al. (2022) applied the ASA perspective to examine the effect of gender on crowdfunding, highlighting the significance of superficial and characteristic fits.

Bapna and Ganco (2020) offers a nuanced perspective, suggesting that the gender gaps observed in traditional equity financing might be ameliorated in the equity crowdfunding context. Their research indicates that while inexperienced female investors show a strong preference for ventures with female founders, this preference diminishes with experience.

In the context of narcissism and gender, the literature implies a differential impact. While both genders can exhibit narcissistic tendencies, men’s narcissism often correlates with positive outcomes like ambition, whereas women’s narcissism might be linked to traits that are perceived negatively, such as egotism (Klyver and Grant, 2010; Sherry et al., 2014).

In a study of over 1,000 entrepreneurs, men appeared to be more narcissistic than women, and men’s narcissism was positively associated with business success, while women’s narcissism was not (Klyver and Grant, 2010; Sherry et al., 2014). Funding for female-led start-ups lags (Kanze et al., 2018). That study suggests that men’s narcissism may be an asset in business, while women’s narcissism may be a liability. In another study, men and women were asked to rate themselves on a scale of 1–7, with 1 being not at all narcissistic and 7 being extremely narcissistic. Men rated themselves, on average, as 4.5, while women rated themselves as 3.3. This study found that men are more likely to self-identify as narcissistic, and that men’s narcissism is more likely to be associated with positive outcomes, such as self-esteem and funding success, while women’s narcissism is more likely to be associated with adverse outcomes, such as anxiety and depression (de Hoogh et al., 2015; Shahriar, 2018; Malach‐Pines and Schwartz, 2008). Thus, these studies suggest gender differences in narcissism, with men being more likely to be narcissistic than women. Men’s narcissism is more likely to be associated with positive outcomes, while women’s narcissism is more likely to be associated with adverse outcomes (Grijalva et al., 2015; Cañizares and García, 2010; Koellinger et al., 2013). The gap that remains requires understanding the causality driving these findings.

The intricate association between narcissism, gender and entrepreneurship demands a nuanced understanding. Central to this discussion is the person–environment (P-E) fit theory, which posits that individuals are drawn to environments that fit their personality. Harms et al. (2020) leveraged this theory to explore the propensity of individuals with NPD to opt for self-employment. Interestingly, while there is a modest positive correlation between NPD and self-employment, gender emerges as a significant moderator. Narcissistic women, in contrast to their male counterparts, are less inclined towards self-employment. This divergence underscores the differential effects of narcissism on career choices across genders. Moreover, a pivotal revelation from the study is that narcissists, irrespective of their self-employment status, do not necessarily achieve higher incomes. This challenges the conventional wisdom that self-employment might be a lucrative avenue for narcissistic individuals, suggesting that the interrelation between narcissism, gender and entrepreneurship is far more intricate than traditionally perceived.

Measuring start-up success is a complex task, as the definition of success can vary depending on the company’s goals and objectives. However, some standard metrics used to measure success include revenue growth, customer acquisition and retention rates and employee satisfaction. This study uses VC funding as a proxy for start-up success. This choice of proxy may introduce a bias as VCs tend to favour high-growth companies over sustainable-growth companies. Nonetheless, it is widely regarded as a success metric and considered to be mostly influenced by the founders’ actions (Dessyana and Riyanti, 2017; Prohorovs et al., 2019). Moreover, the connection between the founder gender and narcissism to firm funding has to simple logical arguments. Firstly, fundraising is conducted by the founders themselves, linking their success directly with their own efforts. Secondly, the median size of companies is nine employees, resulting in a large managerial lever, which results in a very direct relationship of the founder/leadership team on the performance.

Hypotheses development

Based on the theory we derived, we derive a triangular model of narcissism, gender and funding success. There are effects from all these components, but the relative effects and causalities remain unknown, and the present study strives to fill these gaps in knowledge as visualised in Figure 1. To explain the model and the relative effects, we test four logically consistent hypotheses.

Start-up success is ultimately the financial success in any given market. For early-stage start-ups, which are more focused on growth than on returns, it is regularly hard to measure this success. Widely accepted as a proxy in the market is the success in raising funds. Because VC investors are placing bets on companies that they assume to create returns through market success in the foreseeable future, this proxy follows an oracle-of-Delhi logic. We will operationalise the start-up performance with the funding success following this widely accepted metric, fully aware that it is by no means a perfect representation.

Gender and entrepreneurial funding success

Despite the increasing visibility and contributions of female entrepreneurs to global economies, persistent gender disparities in access to start-up funding remain a critical barrier (Aparicio et al., 2022; Koellinger et al., 2013). Research consistently highlights that female founders face significant challenges in securing equity funding, a disparity that cannot be fully explained by differences in business models, sectors or performance metrics (Balachandra et al., 2019; Marlow and McAdam, 2013). Instead, this phenomenon is intricately linked to the stereotypical perceptions of gender roles and the implicit biases that investors bring to the decision-making process (Kanze et al., 2018; Malmström et al., 2017).

The influence of gender on entrepreneurial funding success is not merely a matter of numerical underrepresentation. It is emblematic of deeper societal norms and expectations that shape the interpretation of entrepreneurial potential. Gendered expectations often lead to a skewed perception of risk and competence, with female founders frequently having to meet higher thresholds to prove their credibility (Balachandra et al., 2019; Eddleston et al., 2016). This bias is compounded by the tendency of social networks within the VC world to be male dominated, further limiting women’s access to crucial funding opportunities (Coleman and Robb, 2009; Politis, 2008).

Furthermore, the literature on gender and entrepreneurship suggests that these funding disparities may also be influenced by differences in communication styles, pitch presentations and the way male and female founders are questioned by investors (Balachandra et al., 2019; Kanze et al., 2018). Such dynamics highlight the complex interplay between societal norms, investor biases and gendered communication, underscoring the need for a deeper understanding of how these factors collectively impact funding outcomes.

Given this backdrop, H1 posits that female founders receive less funding for their start-ups compared to male founders. This hypothesis is not only grounded in the empirical evidence of funding disparities but also seeks to contribute to the critical discourse on gender equity in entrepreneurship. By exploring the nuanced mechanisms through which gender influences funding success, this research aims to provide actionable insights that can help mitigate biases and foster a more inclusive entrepreneurial ecosystem:

H1.

Female founders receive less funding for their start-ups compared to male founders.

Gender and narcissistic tendencies in entrepreneurship

The entrepreneurial journey is profoundly influenced by the personalities of its navigators, where traits such as confidence, resilience and innovativeness play pivotal roles in navigating the tumultuous path to start-up success. Among these traits, narcissism – a personality characteristic marked by grandiosity, entitlement and a dominant focus on oneself – has been identified as both a potential asset and liability in entrepreneurial leadership (Gerstner et al., 2013; O’Reilly et al., 2014). While the adaptive aspects of narcissism, such as self-confidence and charisma, can enhance a founder’s ability to inspire stakeholders and attract investment, its maladaptive facets, such as sensitivity to criticism and exploitative tendencies, can hinder long-term success and relationships with partners and employees.

Gender plays a crucial role in the manifestation and perception of narcissistic tendencies within the entrepreneurial context. Societal norms and gender roles significantly influence the development and expression of personality traits, including narcissism. Research in psychology has consistently shown gender differences in the prevalence and expression of narcissistic tendencies, with men generally scoring higher on measures of narcissism than women (Grijalva et al., 2015). These differences are not merely reflections of biological predispositions but are deeply rooted in the socialisation processes and societal expectations that shape behaviours and attitudes towards leadership, competition and self-presentation (Bosson et al., 2003).

In the high-stakes environment of entrepreneurship, where founders must navigate uncertainty, persuade investors and lead their ventures towards growth, the implications of these gendered expressions of narcissism are profound. The entrepreneurial ecosystem, often characterised by its competitive and masculine-coded norms, may differentially reward, or penalise the narcissistic behaviours exhibited by male and female founders, respectively. For instance, the assertiveness and confidence associated with narcissism may be celebrated in male entrepreneurs as signs of strong leadership, whereas the same traits in female entrepreneurs may be perceived negatively, reflecting societal biases that penalise women for deviating from traditional gender norms (Hmieleski and Sheppard, 2019; Thoroughgood et al., 2018).

Given these considerations, H2 proposes that female founders exhibit lower narcissistic tendencies compared to male founders. This hypothesis not only draws on the established literature on gender differences in narcissism but also seeks to explore how these differences manifest and are perceived within the entrepreneurial landscape. By examining the role of gender in the expression and impact of narcissistic tendencies among entrepreneurs, this research aims to shed light on the nuanced ways in which gender and personality intersect to influence entrepreneurial outcomes:

H2.

Female founders exhibit lower narcissistic tendencies compared to male founders.

Narcissistic tendencies and funding success in entrepreneurship

Entrepreneurship is a domain where personality traits can significantly influence outcomes. Among these traits, narcissism stands out for its dual nature, offering both potential benefits and drawbacks. Narcissistic entrepreneurs are often characterised by their grandiose sense of self-worth, dominance and a strong desire for admiration, traits that can play a pivotal role in the initial stages of venture creation and fundraising (Nevicka et al., 2013). The early phases of a start-up’s lifecycle demand extraordinary belief in the venture’s potential and the capability to persuade others of its value – conditions where the confident and charismatic presentation associated with narcissistic tendencies can be particularly advantageous.

Investors, especially in the seed and early stages of funding, are not just investing in a business model or a market opportunity; they are investing in the founder and their team. At this juncture, the ability to project confidence, articulate a compelling vision and persuade potential investors of the start-up’s potential is crucial. Narcissistic entrepreneurs, with their inherent self-assurance and persuasiveness, may thus find themselves at an advantage in attracting initial investments. Their boldness and assertiveness can be perceived as leadership strength, making them more likely to secure funding (Chatterjee and Hambrick, 2007; Grijalva et al., 2015).

However, the relationship between narcissism and funding success is nuanced. While narcissistic traits can facilitate initial fundraising efforts through their impact on impression management and persuasive communication, they also carry risks. The overconfidence and risk-taking propensity associated with high levels of narcissism can lead to overly optimistic projections and strategic decisions that might not hold up under scrutiny over time (Foster et al., 2009; Owens et al., 2015). Thus, while narcissism may be a boon in the early, vision-selling stages of a start-up, it may become a liability as the venture matures and requires more pragmatic management and collaboration.

When founders, particularly those with narcissistic tendencies, successfully secure funding, it can be perceived as an affirmation of their capabilities, vision and self-worth (Twenge et al., 2008; Twenge and Foster, 2010).

Research indicates that narcissistic tendencies can significantly influence a start-up’s ability to secure funding, especially in its early stages (Linder and Sperber, 2020). This observation leads us to consider the stage of start-up development as a potential moderating factor in the relationship between narcissism and funding success.

Given these considerations, H3 posits that higher narcissism in founders correlates positively with funding success in the initial stages of a start-up. This hypothesis acknowledges the potential advantages of narcissistic traits in the context of early-stage fundraising while also hinting at the complex, potentially double-edged nature of these traits in the entrepreneurial journey. By examining the impact of narcissism on early-stage funding success, this research aims to contribute to a deeper understanding of how personality traits influence the dynamics of venture financing and the broader implications for entrepreneurial leadership and funding success:

H3.

The higher founders’ narcissism, the more likely they are to secure funding in the initial stages of a start-up.

Gender as a moderator for narcissism in funding success

The entrepreneurial venture funding process is a multifaceted phenomenon where the interplay of founder characteristics and societal perceptions significantly influences outcomes. The assertive, confident and ambitious traits associated with narcissism, as discussed in H3, can be particularly advantageous in attracting early-stage investment. However, as posited in H1 and H2, gender plays a critical role in modulating the reception and evaluation of these traits by potential investors, reflecting broader societal biases and norms.

Given the established gender disparities in both the manifestation of narcissistic tendencies and their perceived acceptability within professional contexts, it is imperative to explore how gender moderates the relationship between narcissism and funding success. This inquiry aligns with recent calls in the literature to examine the nuanced ways more closely in which gender dynamics influence entrepreneurial success, specifically within the realm of venture funding (Eddleston et al., 2016; Kanze et al., 2018):

H4.

Gender moderates the relationship between narcissistic tendencies and start-up funding success, amplifying this effect for male founders compared to female founders.

H4 aims to dissect the moderating effect of gender on the nexus between narcissistic tendencies and funding success, positing that societal biases against assertive and ambitious behaviours in female entrepreneurs may dampen the otherwise positive effects of narcissism observed in their male counterparts. This hypothesis seeks not only to contribute to the academic discourse on entrepreneurship, personality psychology and gender studies but also to inform practical strategies aimed at reducing gender biases in venture funding.

By systematically investigating this moderating relationship, the research endeavours to provide a more comprehensive understanding of the barriers and facilitators to funding success across genders, thereby offering insights that can help level the playing field for all entrepreneurs, irrespective of gender.

Methodology

In this study, we aimed to understand narcissistic tendencies among start-up founders in the DACH region. To achieve this, we used two established measures:

Founders’ narcissism. We measured narcissistic tendencies in the founder using the established NPI-16 and NPI-1. NPI-16 is a well-established questionnaire comprising 16 pairs of statements, and the respondent is asked to choose the one from each pair that they agree with most. NPI-1 is a self-reported measure that consists of a single question about how narcissistic the respondent considers themselves. Both tests are scored on a scale from zero to one, with zero indicating the least number of narcissistic tendencies and one indicating the most. It is important to note that these tests are not a proxy for clinical narcissism.

However, a major shortcoming of NPI-16 is that it can be easily manipulated at the participants’ will as the items are obvious. We combined the self-reported narcissism results of NPI-1 and NPI-16 to create a narcissism score measurement. We deleted reports of zero narcissistic tendencies or perfect narcissism from the set as both outputs are likely to be dishonest.

Sample and data collection. We surveyed the founders of start-ups in the DACH region, sending the survey to 5,695 verified start-up founders from among a Crunchbase list and leading accelerators in the target region. We only surveyed start-up founders, not people who intend to found a company or small companies that are not start-ups. As a result, the founders in this sample represent high-growth companies, referred to as venture cases. The survey took place in August 2022, and after manual data cleansing, we had a sample of 540 valid respondents with complete data.

We used the LinkedIn and Crunchbase APIs to crawl verified control variables automatically. The scripts used various APIs to collect information on control variables. We conducted manual data cleansing after every processing step to ensure the highest data quality. We excluded data from participants who were not founding or running a start-up.

By comparing our data sample with the Deutscher Start-up Monitor 2021 (DSM) – to our knowledge, the most complete survey on German start-ups – we were able to examine our sample’s representation. Firstly, our study covers 16.7% of all start-ups in Germany and does not cover any small company that is not qualified as a start-up. The quota of female respondents (16.5%) comes very close to the overall number of female founders in 2021 (17.7%). In our sample, 53.3% of companies received external funding, 14.6% received funding only from business angels and 30.5% had funding from VC funds, which comes close to the DSM numbers of 49.9%. The most common industries represented include SaaS (30.0% versus 30.5% DSM), MedTech (7% versus 10.6% DSM) and consumer goods (8% versus 9.8% DSM). Thus, we can regard our sample as representative of the DACH region. The oversampling to other regions is due to our interest in start-up founders rather than start-ups.

There were significantly fewer female founders than male founders among the respondents. This distribution aligns with the general distribution of genders in entrepreneurship and can be explained by differences in entrepreneurial aptitude among the broader public (Bönte and Jarosch, 2018) as well as personality traits (Caliendo et al., 2015) as Table 1 shows. Our sample included 90 female and 450 male founders; no founder in this sample identified as non-binary. With a share of 16.67% female founders, the panel is representative of German founders overall, where the fraction of female founders grew from 14.6% to 17.7% from 2017 to 2021 (Kollmann et al., 2021). Additionally, 8.17% of the respondents were serial founders based on data from their LinkedIn or Crunchbase profiles, indicating at least two founded legal entities (excluding holding or consulting companies).

Gender. The founder’s gender is the last part of our model. Participants self-reported gender, and all participants identified as either “male” or “female”. We also controlled for diversity, thus correcting for purely male, purely female and diversely led teams. There was no purely female-led team in our sample. We also sought, but could not find, “female” industry topics. The distribution of female founders across different industries did not follow a pattern.

Education level ran from 0 to 4 for the levels of “high school”, “undergraduate”, “postgraduate” and “PhD/MBA”, respectively. Education is assumed to have an influence as it helps raise – capital higher educated founders raise more capital – and it is expected to lower narcissistic tendencies.

Funding success. The venture funding of a start-up serves as the variable for venture success. The idea behind this construct is that VC invests in potentially successful start-ups. One of the most important metrics for venture funding decisions is start-up growth, which matches our definition of start-up success. Data on funding was from LinkedIn and Crunchbase, which we had API access to. In addition, public data helps us differentiate between public funds (i.e. grants) and VC. Grants are not part of this metric as they are usually not awarded for high growth but to work towards social good. Our variable comes in logarithmic form. Commonly, start-up funding grows exponentially over funding rounds and is therefore unsuitable for OLS regressions.

Control variables. Industry is a crucial determinant of the fundability of a company. Industry strongly correlates with VC investment “hot topics” and defines the capital demand per funding round. We coded 16 industries based on participants’ reports. Our descriptive statistics indicate a significant relationship of serial founders on narcissism. A serial founder is a start-up founder who started at least one commercial company before the start-up they are currently running. The potential values for the variable are zero for no serial founder and one for a serial founder.

Lastly, we also evaluated whether the founder’s or company’s age could influence the fundability of the start-up. These two parameters complete our variables.

Results

Data analysis strategy. Our statistical models use linear regression to examine the explanatory value of narcissistic inventory on team and company success. We built a dummy value of narcissistic founders or narcissistic founder teams for several regressions. In these cases, we took the distribution of NPI-16 and defined narcissistic founders as founders with an NPI-16 score of the mean plus one sigma. In case of testing effects on the company’s funding success, we regressed against funding amount and company fate. For these regressions, we started by using exploratory factor analysis (EFA) to check the general validity of our model and followed established methodologies in CEO narcissism research (Chatterjee and Hambrick, 2007, 2011), comparing the means (if applicable) and linear regressions (see Figure 2 and Table 2).

The loading factors lie between 0.636 and 0.936. The cross-loading reaches up to 0.073. A KMO of 0.502 and a Barlett of < 0.001 allow acceptance of the data for the EFA under precise factor extraction. The Kaiser criterion shows the eigenvalues of the third factor at 1.345 and a potential fourth at 0.591. Hence, all legs are strongly significant under any model. The chi-square test on the components suggests no crosstalk between the co-founder relationship and investor relationship components, suggesting that all regressions and analyses run on normalised values. There is no multimodality in any of the input variables. There is no Breusch–Pagan heteroscedasticity in the regressions, and there are no outliers in either variable based on the study design or influence statistics. A power analysis suggests the least n of 190 for a power of 0.8 and a significance level of 5%. Because our smallest regression included an n of 283, we can consider the sample sufficient. Further robustness has been provided with expended models in the regressions in the form of ANOVA.

We observe in Table 3 a limited influence of gender on narcissism. The models must include education, industry and controls to have explanatory value. Even then, the model is weak, as the ANOVA shows. The effect of gender on narcissism is weak and negative, and the control variables outweigh the main effect. Based on these tests, we reject H2.

The role of gender in funding success is statistically significant than its role in narcissism when comparing the models in Tables 4 and 5. The models including education and industry explain more variance than the previous models. The significant F-values across these models underscore their statistical robustness and the reliability of the findings. This demonstrates a strong foundation for the models’ predictive power regarding the variables studied. The female gender significantly and negatively affects our founder’s ability to raise funds. That effect size remains stable across the models. Though the significance suffers. Overall, the effect remains observable and significant, and we therefore cannot reject H1 based on our analyses.

The role of narcissism in funding success remains significant when introducing at least education and industry. Controlling for education and industry, the model’s validity is affirmed, yet the negative influence of narcissism, even with added moderators, shows limited statistical significance. Given the modest impact reflected by both the coefficients and the model’s explanatory power, H3 is not supported and is therefore rejected.

For the moderation analysis, we added an interaction term of narcissism and gender (Table 6).

The moderation analysis, incorporating an interaction term between narcissism and gender, aimed to explore whether the relationship between narcissistic traits and funding success varies by gender. The findings indicate a non-significant interaction effect (p = 0.560), suggesting that the influence of narcissism on funding success is consistent across male and female founders. This implies that while narcissism and gender individually may affect funding outcomes, their combined effect does not significantly alter the prediction of funding success. In essence, gender does not modify the way narcissistic tendencies of start-up founders impact their ability to raise funds. This consistency across genders underscores the need to consider narcissism as a personality trait that uniformly affects entrepreneurial finance, independent of the founder’s gender. Therefore, we have to reject H4.

None of the examined cases reflected heteroscedasticity or collinearity. All variables are approximately normally distributed.

In summary, we found that gender and narcissism are widely disassociated as influencing factors on funding success as funding success. Both factors negatively influence the firm’s success, with gender being the more powerful influencing factor. We also find that funding success has more of an influence on narcissistic tendencies than the other way around (see Figure 3).

We also found that narcissism affects firm success but not the other way around. Hence, we can determine which factors affect which others.

Discussion

Our findings elucidate the nuanced roles of gender and narcissism within the entrepreneurial domain, explicitly highlighting how these factors independently and jointly influence funding success. We discovered a pronounced disparity in funding success rates between genders, which is further complicated by the presence of narcissistic traits in start-up CEOs. This intersection of gender and personality offers novel insights into the dynamics of start-up success and funding strategies.

Our findings resonate with and expand upon recent research, indicating persistent gender disparities in access to entrepreneurial resources (Guzman and Kacperczyk, 2019; Henry et al., 2015). While our study confirms these trends within the German-speaking countries context, it also illuminates the variable influence of narcissistic tendencies across genders, which has been underexplored in extant literature (Klyver and Grant, 2010). These insights contribute to the nuanced discourse on how inherent personality traits and societal biases intertwine, shaping the entrepreneurial funding process.

Mechanisms underlying narcissism and funding success

Narcissistic traits in CEOs, characterised by overconfidence and boldness, initially attract investment due to the perception of strong leadership and vision (Cragun et al., 2020; Wales et al., 2013). However, this study illuminates the double-edged nature of such traits. At the same time, they can secure early-stage funding, our analysis, supported by evidence from both empirical studies and theoretical models, reveals that these same characteristics often lead to high-risk strategic decisions. This nuanced understanding underscores the importance of balancing confidence with caution in entrepreneurial leadership.

Furthermore, narcissism among CEOs is a double-edged sword. While narcissism and related traits such as Machiavellianism and psychopathy can create challenging environments (Brownell et al., 2021), it can motivate the CEOs to thrive towards higher performance (Brownell et al., 2023). Narcissistic CEOs can resist influence and might make strategic decisions based on personal inclinations rather than holistic organisational benefits (Gubik and Vörös, 2023; Zhu and Chen, 2014). Over time, this can translate into strategies that might not align with the organisation’s best interests, leading to varied and often volatile performance outcomes.

The association of gender and narcissism

The gender disparity in funding success, as highlighted in our results, might be underpinned by the dynamics of narcissism and its interaction with gender. Given that narcissism aids in signalling capabilities, a lack of pronounced narcissistic tendencies might impede female founders from effectively showcasing their entrepreneurial vision. Coupled with pre-existing biases and societal stereotypes, this could contribute to the observed funding challenges for female entrepreneurs.

Women of lower narcissistic tendencies can use this as an advantage during upcoming funding rounds to mitigate parts of their disadvantaged situation coming with their gender. Because women in general samples show lower narcissistic tendencies compared to men, this might be one way to level the playing field in terms of funding.

However, in discussions without these nuances, women are still funded less than men, despite the potential differences in narcissistic tendencies. This imbalance suggests an even stronger bias against female founders then previously explained. Furthermore, women with above average shows of narcissistic tendencies might suffer doubly from adverse effects in raising funds for their companies.

Unexamined effects of narcissism

While our study provides valuable insights into individual narcissism’s role in entrepreneurial success, it also unveils a critical gap in understanding the systemic effects of narcissism in corporate contexts. Drawing on interdisciplinary perspectives from psychology and organisational behaviour, we propose a further investigation into how narcissistic leadership might influence organisational culture, decision-making processes and ultimately, corporate performance (Lassoued and Khanchel, 2023), as well as the performance of non-financial goals (Cesinger et al., 2023). This broader approach not only extends the current research but also opens new avenues for exploring the complex dynamics of narcissism in the business world.

Limitations and future directions

While our study’s design and methodology offer robust insights, several limitations merit discussion. The use of self-report measures like NPI-16, though commonplace, may introduce response biases that future research could mitigate through triangulation or alternative assessment tools. Additionally, our sample, drawn predominantly from German-speaking regions, calls for replication and extension into diverse cultural contexts, given the variability in narcissistic tendencies and gender norms across different societies (Twenge et al., 2008; Twenge and Foster, 2010).

Looking ahead, we advocate for longitudinal and cross-cultural studies that examine the evolution of narcissism and gender dynamics throughout the entrepreneurial lifecycle. This approach could uncover temporal shifts and cultural nuances, providing a global perspective on the interplay of personality and gender in entrepreneurial success.

Our study also suggests a need to delve deeper into the systemic effects of narcissism beyond the individual level. Investigating the implications for organisational culture and decision-making processes would offer a holistic view of how narcissistic leadership permeates through the corporate ecosystem (Cesinger et al., 2023; Lassoued and Khanchel, 2023).

Understanding the broader ramifications of our findings has profound implications for policy and practice. The apparent systemic bias against female founders underscores an urgent need for interventions aimed at equity in funding opportunities. Additionally, unravelling the dual-edged impact of narcissism on leadership and strategy could inform leadership development and investor decision-making.

Conclusion

This study’s exploration into the association between gender, narcissism and start-up funding success has unveiled critical insights that both affirm and challenge prevailing notions within entrepreneurial research. By highlighting the pronounced influence of gender and the nuanced role of narcissism, we contribute to a more comprehensive understanding of the factors driving funding disparities. We urge future researchers to delve deeper into these dynamics, exploring the broader implications for entrepreneurial ecosystems and policy frameworks. The path forward should embrace interdisciplinary approaches to unravel the complex interdependencies shaping entrepreneurial outcomes.

Our research provides new insight into the systemic insignificance of narcissism in start-up entrepreneurship and contributes to a comprehensive examination of its effect on a macroeconomic level. This understanding helps to limit future research to case-by-case observations. Through our results, we have advanced understanding of the relationship between narcissism and start-up success and the association between narcissistic tendencies and gender.

The findings reveal that female entrepreneurs still face challenges in raising funds compared to their male counterparts. This disparity is independent of education, age and industry, suggesting that implicit discrimination may be the root cause. We encourage venture funds to improve their efforts in providing equal opportunity investment and unbiasing their approach.

Our models attempted to measure relative entrepreneurial performance by examining financial performance indicators. With a growing body of research on workplace quality (see “New Work”), another strand of research regarding gender diversity becomes interesting. Because high levels of top management narcissism reduce the quality of life at work (Chatterjee and Pollock, 2017), gender diversity could counteract and improve this situation. Such a study would need to find full-time employees in several start-ups and survey them on quality of life to create a representative sample.

In the early stages of a start-up, founders and employees have very similar levels of power and influence. Thus, another valuable insight can be the role of early-stage employees, especially if a diverse early-stage employee can play the moderator role we found in our research. Such research would expand the findings on founder teams to the core team that usually drives progress in an early-stage company.

As the example of India shows, (start-up) entrepreneurship is becoming widely popular in developing economies (Manshani and Dubey, 2017). Because female entrepreneurs can positively influence these economies as a whole (Aparicio et al., 2022), we need further research regarding whether the positive effects of this work also hold in the developing world. Even differences in the effect strength can be important indicators for policymakers to accelerate citizens’ well-being.

Another approach can follow founder teams over time. As we have seen in our research, levels of narcissism are different for different company ages, and we know that narcissism scores are not static but change with time due to many factors, i.e. founder age (Aydin et al., 2023). Understanding narcissism over time in founders can help us understand the basic assumption that entrepreneurship attracts individuals with above-average narcissistic tendencies or if the profession increases narcissistic values due to factors that have not been sufficiently researched.

Figures

Figure 1.

Model of narcissism on start-up funding success

Figure 2.

Comparison of means for selected groups

Figure 3.

Model of narcissism on start-up success – after testing the hypotheses by means of linear regressions

Table 1.

Sample description; respondent characteristics and demographical data

Founder	N	%	Start-up	N	%
Gender			Founder team diversity
Male	450	83.33	Diverse	166	30.81
Female	90	16.67	Homogeneous	374	69.19
Total	540	100.00	Total	540	100.00
Education			Fate
High school	10	1.85	Exit	18	3.33
Bachelor	111	20.56	Active	463	85.74
Master	328	60.74	Closed	59	10.93
PhD/MBA	91	16.85	Total	540	100.00
Total	540	100.00
			Top regions
Serial founder			Bavaria	203	37.59
True	43	7.96	Berlin	81	15.00
False	497	92.04	Switzerland	64	11.85
Total	540	100.00	Austria	32	5.93
			Stage
			Bootstrapped	253	46.85
			Angel	82	15.19
			Seed	121	22.40
			Series A	44	8.15
			Series B	22	4.07
			Late stage	18	3.33
			Total	540	100.00
			Founding date
			2021–2022	117	21.67
			2019–2020	132	24.44
			2017–2018	104	19.46
			2015–2016	68	12.59
			Before 2015	119	22.04
			Total	540	100.00

Source: Authors’ own work

Table 2.

Means, standard deviations and correlations between dependent and independent variables in the research model

	Variable	M	SD	1.	2.	3.	4.	5.	6.	7.
1.	Narcissism	0.85	0.30
2.	Funding (ln)	12.04	5.87	−0.04
3.	Gender	0.16	0.37	−0.04	−0.11
4.	Education	2.98	0.61	−0.09	−0.09	−0.07
5.	Industry (SaaS)	0.26	0.44	−0.01	0.12	0.02	−0.05
6.	Serial founder	0.12	0.32	0.04	0.12	−0.13	−0.05	0.05
7.	Founder age	33.40	7.89	−0.01	0.07	−0.15	0.28	−0.13	0.12
8.	Company age	4.93	4.04	−0.01	0.06	−0.19	−0.02	−0.02	−0.10	0.38

Note: N = 540

Source: Authors’ own work

Table 3.

Linear regression analyses results: gender on narcissism over several models; coefficients, significance, explainability, ANOVA

Variable	Model 1	Model 2	Model 3
Company age	−0.02	−0.01	−0.01
Industry	−0.05	−0.05	−0.06
Serial founder		0.08*	0.08
Education		−0.11**	−0.11**
Age		−0.02	0.02
Gender			−0.03
R-squared	0.07	0.09	0.09
Delta in R-squared	0.07	0.02	0.00
Overall F	1.21	1.31	1.26
ANOVA sig	0.26	0.17	0.20

Notes:

N = 540. Standardised coefficients are reported.

*p < 0.20; **p < 0.10; ***p < 0.05

Source: Authors’ own work

Table 4.

Linear regression analyses results: gender on company success over several models; coefficients, significance, explainability, ANOVA

Variable	Model 1	Model 2	Model 3
Company age	−0.04	−0.01	0.01
Industry	0.04	0.07	0.07
Serial founder		0.05	0.03
Education		−0.12**	−0.13***
Age		0.10*	0.10*
Gender			−0.09*
R-squared	0.06	0.07	0.08
Delta in R-squared	0.06	0.01	0.01
Overall F	2.08	2.06	2.08
ANOVA sig	0.01	0.01	0.00

Notes:

N = 540. Standardised coefficients are reported.

*p < 0.20;

**p < 0.10;

***p < 0.05

Source: Authors’ own work

Table 5.

Linear regression analyses results: narcissism on funding success over several models; coefficients, significance, explainability, ANOVA

Variable	Model 1	Model 2	Model 3
Company age	−0.05	−0.01	0.01
Industry	0.04	0.07	0.06
Serial founder		0.05	0.06
Education		−0.12**	−0.13***
Age		0.10*	0.10*
Narcissism			−0.10***
R-squared	0.12	0.14	0.15
Delta in R-squared	0.12	0.02	0.01
Overall F	2.08	2.06	2.08
ANOVA sig	0.09	0.01	0.00

Notes:

N = 540. Standardised coefficients are reported.

*p < 0.20; **p < 0.10; ***p < 0.05

Source: Authors’ own work

Table 6.

Moderation analyses results: narcissism on funding success moderated by gender; coefficients, significance, explainability, ANOVA

Variable	Model 1	Model 2	Model 3	Model 4
Company age	−0.05	−0.01	0.01	0.01
Industry	0.04	0.07	0.06	0.06
Serial founder		0.05	0.06	0.04
Education		−0.12**	−0.13***	−0.14**
Age		0.10*	0.10*	0.10*
Narcissism			−0.10***	−0.12**
Interaction				0.06
R-squared	0.12	0.14	0.15	0.16
Delta in R-squared	0.12	0.02	0.01	0.01
Overall F	2.08	2.06	2.14	2.06
ANOVA sig	0.09	0.01	0.00	0.00

Notes: N = 540. Standardised coefficients are reported.

*p < 0.20; **p < 0.10; ***p < 0.05

Source: Authors’ own work