Most entrepreneurs have their pitch down to a science. With the help of a team of researchers at the University of Washington Business School, this science will soon have some empirical evidence to back it up.
Drs. Xiao-Pint Chen and Suresh Kotha, along with graduate student Xin Yao, are jointly studying the effect that an entrepreneur's ‘passion’ has on potential investors, as opposed to less emotional factors like the logic of the business plan, or the experience of the management team.
The researchers have identified several verbal and non-verbal ‘cues’ that people give off when pitching a business plan, indicating a range of commitment levels from vague interest to burning, passionate determination.
These cues will be put to the test at the UW Center for Technology Entrepreneurship's annual business plan competition this month. Real-live venture capital judges will be observed to see how they react to the varying degrees of entrepreneurial zeal. “We propose that perceived passion affects judges' evaluation of the quality and creativity of the b-plan[s], which in turn influence[s] their final investment decisions,“ reads the research proposal.
In a recent Seattle Times article about the study, Northwest Venture Associates partner Tom Simpson admits that, years ago, he passed on investing in Howard Schultz's Starbucks startup. “I missed and completely discounted all the passion that Howard Schultz had,“ and instead puzzled over the mechanics of the coffee business, Simpson told the newspaper.
If Chen and team end up cracking the code on verbal and body language that gets venture capitalists fired up about a business plan, you can be sure that business schools around the world will be teaching classes on ‘passionate presentation.’