UCL School of Management Professor Chia-Jung Tsay has written an article for Sifted, an online platform specialising in startups, in which she discusses the key factors in pitching to venture capitalists.
Entrepreneurs in the pitching process tend to use their time conveying as much information as possible, Chia says, discussing the backstory, the technology, and the impact on their business on their chosen industry. However, information overload is not necessarily the key to a successful pitch, and Chia argues that there are other factors to consider.
Chia’s recent empirical research indicates that venture capitalists are very receptive to visual cues. Asked to identify the winning pitch, 1,855 novices and experienced investors participated in the studies and were given either audio only, video only, video plus audio, or transcript excerpts. The studies found that investors who saw segments of silent videos were more able to accurately identify the winning pitches, and the data suggests that the most impactful factor that swayed their opinion was the passion from entrepreneurs that emerged through visual cues.
Also paramount to the pitching process is hard work, but, according to Chia, it may not necessarily outweigh natural talent, with research indicating that venture capitalists are more likely to invest in entrepreneurs that appear more naturally gifted in their chosen field.
Finally, Chia argues that founders need to irrefutably understand their audience when developing a business and pitching to venture capitalists. She suggests that entrepreneurs may benefit from conducting test runs of their pitches and integrating the feedback into their speeches.
When discussing misconceptions of the pitching process, Chia is clear on her position: venture capitalists are not swayed by information only, and this is something that entrepreneurs must remember if they are planning on successfully raising venture capitalist funds.