Persuading investors: A video-based study

voxeu.org

28 points·Nokinside··3 comments

> Positive (i.e. passionate, warm) pitches increase the probability of funding, but on receiving funding, high-positivity startups tend to underperform. Women are more heavily judged on delivery when evaluating single-gender teams, but they are neglected when pitching alongside men. The results of an experiment suggest that persuasion delivery works mainly through leading investors to form inaccurate beliefs.

Here is VoxTalks podcast discussing this paper with authors: https://voxeu.org/vox-talks/pitching-passion

Here is the paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3583898

TL;DR Probability of funding increases dramatically with pitch passion, but it don't transform into company performance.

Interestingly, I was just on the receiving side of a discussion asking me to invest money in some non profit association (to build a wind turbine). Interestingly, the executive board talked about all they have done to ensure the thing will work, how many trusted partners they leveraged, how much they believe in the project, how much money they have raised, how much I will earn out of it, etc.

Unfortunately, when I asked "what about showing me the documents you have written when doing risk analysis, project planning, etc. ?" they were unable to show them saying that these are "still secret" or that "some external investors requested the executive board to not disclose stuff".

Basically, they were asking me to trust them, they were not giving me the tools to build understanding about them and, ultimately to trust them.

Needless to say I didn't feel much convinced.

This is interesting, applying machine learning into a video that persuades investors. It shows how powerful ML is in identify and impacting aspects of industries.

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