When it comes to pitching business ideas to potential investors, an
entrepreneur’s excitement and enthusiasm can be the difference between
dreams taking shape or ultimately falling flat.
But it’s not just the intensity of enthusiasm that’s important,
according to a recent study by a team led by Georgia Institute of
Technology researchers. How long an entrepreneur displays the highest
level of excitement during a pitch also plays a major role in predicting
success in receiving funding.
Basically, too much enthusiasm can be a bad thing.
“The findings suggest that investors may interpret prolonged periods
of high enthusiasm as over-optimistic,” said Dong Liu, an associate
professor in Georgia Tech’s Scheller College of Business.
“Over-optimistic entrepreneurs are thought to make irrational decisions
and overestimate their products’ profitability.”
In the study, which was published April 8 in the Academy of Management Journal,
the researchers described using artificial intelligence software to
analyze video pitches for 1,460 business funding proposals for products
posted on the crowd funding website Kickstarter.
The software used facial expression recognition and big data
analytics to measure the intensity of enthusiasm in more than 8 million
frames of video, then recorded how long the presenters stayed at their
maximum level of excitement, which the researchers described as the
point of “peak joy.”
They found that, generally speaking, the higher the peak level of
enthusiasm, the more likely the entrepreneur was to receive funding,
after controlling for differences in the products and business ideas.
But there was a bell curve in the results, where the likelihood of
funding tended to fall as “peak joy” levels went on for too long.
“Although a higher level of peak joy displayed by entrepreneurs
during their pitches leads to better funding performance over time,
prolonged display of peak joy seemed to undermine funding performance,”
Liu said. “Another possible interpretation is that investors may believe
the entrepreneur is acting and the pitch is manipulative. Maybe they
feel the entrepreneur is using his or her excitement to manipulate the
investors’ perceptions in hopes of increasing the odds of getting
The facial recognition software analyzed when the presenters made
expressions linked to joy, such as raising the cheek, drawing the
corners of the mouth into a smile, and the movement and position of the
eyes. The researchers noted that the software, called FaceReader, was
even more accurate in recognizing emotions than real people analyzing
those video frames.
The researchers also found another factor that influenced funding
success was at what point during the presentation “peak joy” happened.
They found the most effective times to display enthusiasm was at the
beginning of the pitch and near the end.
“The results of our research could be broadly applicable to
different kinds of audiences, not just those funding projects through
crowd funding websites,” Liu said. “Venture capitalists are looking for
good business ideas on these websites too. But in general these findings
could help inform any business pitch.”
1. US Security from Michael_Novakhov (88 sites)
The Global Security News