Entrepreneurship

A successful start-up pitch is in the hands of the entrepreneur

The pitch — that moment when an entrepreneur briefly has a chance to market their idea to an investor — has acquired a hallowed status in the start-up world, and beyond.

Manuals abound (Pitch Perfect, Life’s a Pitch, Perfect Pitch — you get the idea). Television formats such as Dragons’ Den have turned the mundane meeting in a windowless conference room into showbiz. Executives, film directors and innovators are urged to hone their “elevator pitch”. Ted Talks have become a sort of alternative pitching arena for “thought leaders”, where success is measured in views rather than dollars.

What wouldn’t any enthusiast with a bright idea give for an edge over their rivals? Researchers now claim to have identified that edge: hand gestures can make an investor on average 12 per cent more likely to back a business.

“People who use figurative language and skilful gestures are more likely to be persuasive,” according to Mark Healey of Alliance Manchester Business School, co-author of the study, soon to appear in the Academy of Management Journal.

The idea that body language can help persuade people is not new, and sounds uncontroversial. But this is surprisingly unstable academic ground.

Iranian-born Albert Mehrabian, an engineer-turned-psychologist, came up with the 7-38-55 per cent “communication rule” in 1967, concluding that non-verbal cues from vocal tone and facial expression — respectively the 38 and the 55 in his equation — outweighed the verbal message. Coaches advised executives to emphasise charisma and confidence over content. Prof Mehrabian was understandably touchy about this coarse interpretation. He posted a warning on his website that his findings applied only to communication of feelings and attitudes and were “not applicable” elsewhere.

I regularly meet entrepreneurs and listen to their informal pitches. In 2012, I chatted to Patrick Collison, co-founder of payments company Stripe, in San Francisco. He was engaging, mature beyond his then 23 years, and provided some interesting insights into managing autonomous innovators that I wrote about later. I have no recollection of his range of gestures. Presentations posted online since show the young Irishman has an unremarkable onstage style. Still, whatever his pitching approach, it has been good enough to win Stripe a $20bn valuation, based on its latest investment round.

On the other hand, Marie Schneegans, co-founder of office app Workwell, took theatre lessons as a child. She believes gestures help make presenters memorable, show passion and, combined with eye contact, encourage trust. “Slides give data, but data usually is used as a justification for an investor’s instinct,” she told me.

Professor Karl Moore, of McGill University, has studied executives for years, developing a particular interest in how introverts learn to act occasionally like extroverts, and vice versa. He confirms that “CEOs that use more hand gestures in an appropriate way are more apt to command the room, appear more powerful, generally appear more confident and people we trust and listen to with respect”.

Nobody wants to listen to a halfhearted presentation. But other research suggests passion has no direct impact on investors’ decisions to fund a venture. Preparedness — the content and the entrepreneur’s command over it — does.

The keyword in Prof Moore’s analysis is “appropriate”. There is a fine line between unobtrusive gestures and ridiculous gesticulation. When leaders adopt advice on body language, they can easily invite mockery, as some UK Conservative politicians did recently when they seemed to have adopted the Wonder Woman “power pose” popularised by academic Amy Cuddy.

To determine the best approach, authors of the new gesture study observed actual founders pitching, then hired an actor to record different pitches, based on a real product, to show to investors.

In the most persuasive video, the “entrepreneur” mixes what are called “beat” gestures, demarcating ideas, with “iconic” and “metaphorical” gestures that help describe the product and point to its potential. At no point are his gestures wild or distracting. He spends much of the short presentation with his hands clasped in front of him.

Introverted entrepreneurs may by now be fretting more than ever about their next encounter with venture capitalists. There is hope for them in the study’s small print. Despite the popular impression given by Dragons’ Den, in the real world investors hardly ever decide whether they are “in” or “out” based solely on the pitch. If you cannot communicate your idea at all, you may be in the wrong career. Style alone, though, will rarely triumph over substance.

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Twitter: @andrewtghill

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