Since 2004, angel investor and Chapman University entrepreneurship professor Richard Sudek has been conducting a series of classroom experiments on the effectiveness of business presentations in landing outside investment. The results show that the delivery of a presentation itself can be just as important as the content—underscoring what many of us know intuitively. Sudek's findings suggest it's worth taking the time to refine presentation skills—whether you're an aspiring entrepreneur or a seasoned business owner—a point I've made before in previous columns but can't emphasize enough.
Here's how Sudek's experiment works. He hands his business school students the word-for-word text from 10 one-minute pitches made by real entrepreneurs at the annual Tech Coast Angels' "Fast Pitch Competition." (Sudek is the chairman-elect of the group, considered the largest angel group in the country.) He then asks the students—over 400, so far—to rank the startups according to which ones offer the best investment opportunity. Students typically rank the pitches based on traditional factors like potential market size, revenue, profit, and "domain expertise" (credibility and experience of management team).
The second step is for students to watch video of the same entrepreneurs making their pitch to a large group of investors. In the third step, the students vote again. "The votes always change," says Sudek. Some companies ranked at or near the top of the rankings fall near the bottom while companies that offered a less compelling opportunity place higher. For example, one particular startup nearly always takes the top spot when students evaluate the opportunity in text form. It has patented technology, Fortune 500 customers, and has saved one customer $1 million a year. But after students watch its video again, the pitch drops at or near the bottom because the entrepreneur does such a poor job presenting. "A presentation can have an impact that goes beyond the content," says Sudek. "We see a pattern. When I ask the students why the startup lost votes, they typically say the entrepreneur lacked authenticity, passion, confidence, and the ability to communicate."
Sudek let me watch the videos he shows to his students. As a communications coach, I did notice differences between the entrepreneurs who lost votes and the ones who gained credibility. The entrepreneur who won the competition on paper was visibly nervous: catching his breath at times, eyes cast downward, swaying back and forth, speaking in short, clipped sentences, hands stiffly at sides, stumbling at key parts, no pausing, no smile, no sense of excitement, energy, or passion. He sounded as though he were reading, trying to recall what he had written. When he came to the key sentence—how much money his technology had saved a client—he raced through the delivery and failed to set it apart orally from the rest of his pitch. His company regularly falls near the bottom of the list when Sudek's students are asked to rank the startups after watching his video.
Another entrepreneur, whose pitch ranks lower on paper, always gains credibility when students watch his presentation on video. The video shows an entrepreneur who doesn't take himself too seriously, injects subtle humor into his presentation, smiles, laughs, and exudes energy and passion. He also understands the importance of body language—for example, he waves his hands over his head when describing a typical frustration that customers have.
Sudek is quick to clarify that "passion" and "energy" don't necessarily mean projecting a louder, more boisterous personality. For example, in another video, the most soft-spoken entrepreneur of the group gains credibility when students compare his presentation with the text of his pitch. I believe it's because he starts with a very heartfelt personal story. This entrepreneur lowers his voice, slows his pace of speech, and maintains eye contact as he delivers a poignant tale that reinforces the need for his product. Sudek calls it "quiet passion."
Says Sudek: "Investors invest in leaders. If you're going to build a company, you need to learn how to pitch it. You will be presenting in front of customers, employees, and investors all the time. As an entrepreneur, you don't have to be 'slick', but you must learn to pitch your company and your message with confidence." Those who speak with energy, passion, enthusiasm, and sincerity are perceived to be better leaders. You might have a winning company on paper, but make no mistake—the way you deliver your presentation matters.