One of the most reliably popular things on Insider is a database of pitch decks. We have more than 800 sets of slides that would-be founders have used as visual juice in presentations meant to attract investors. Readers pore over the decks for clues to improve their own — to build a killer set of slides that’ll prove they’re sitting on a unicorn kicking at the doors of its stable, yearning to run.
We’re not the only ones offering that kind of help. It would take hundreds of airport bookshops to house the vast body of literature on how to pitch for dollars. But still, while all the one-off decks and how-to guides can be helpful, they smack more of self-improvement than of science.
For those who would prefer actual data over random advice, I have good news. Teams of social scientists and management researchers all over the world have been doing real, live studies on what kinds of pitches work, who gets the most money, and — maybe most interesting — what pitches actually are, materially and metaphorically. And I’ve been reading the literature.
Pitches, it turns out, aren’t just a “complex marketing instrument,” as one paper puts it. They’re a genre. The pitch is a performance as formulaic and defined as a Netflix category, and as intricate as one of those European board games that comes in a fruit-crate-size box. Whether they’re presented onstage in front of hundreds or in an elite Sand Hill Road conference room, pitches are a medium of communicative exchange. And in and around Silicon Valley, they’re the informational coin of the realm. “It is a dramaturgical, practiced, rehearsed public performance, and every performance is for a particular audience,” says Zenia Kish, a media studies professor at the University of Tulsa who has become a scholar of the form.
In the world of tech, you would think the most effective pitches would be the most logical ones. Silicon Valley, after all, prides itself on being an ultrarational place for data-driven decisions, made by people with the brains and intestinal fortitude to identify disruptive winners. And that’s, you know, a nice story. But it doesn’t really explain how, say, someone like Adam Neumann can come back from orchestrating a billion-dollar meltdown at WeWork and be rewarded with $350 million to launch another real-estate business.
The academic research into successful pitching tells a different story. Winning pitches aren’t about business fundamentals — size of the market, potential for revenue, experience of the founder team, exclusivity of the enabling tech, and so on. What works is a performance designed to inspire trust. “My ability to communicate with you about the product or ideas has to be anchored in your ability to trust me,” Kish says. “That was one of the things that fascinated us about this research — how much more personality and charisma was intentionally built in. People wanted to have a sense of trusting folks.”
The trouble is, once you start valuing things like trustworthiness, you’re relying less on data points and more on personal preferences. In one 2008 paper, a researcher asked 24 investors to evaluate pitches from three entrepreneurs and report on which elements made them most interested to invest in the startups. The things that correlated most highly to a willingness to throw some money at these guys, it turns out, were all “presentational” — things like personal style and speaking ability. Economic stuff had almost nothing to do with it.
Just trust me, OK?
To really hit, the research shows, a would-be founder’s performance has to manifest two specific traits: preparedness and passion. You have to know the numbers cold, understand the market, and anticipate issues in the question-and-answer part of the pitch. But beyond that, you have to show that you feel the business in your soul — that you, like, grew up with rescue dogs, so there’s nothing you want more than to expand your dog-teletherapy business to Asia.
On some level, that makes sense. When someone is pitching an idea no one has tried before, there isn’t any data on whether it’ll work. Past performance can’t predict future results when there’s no past performance. So investors compensate by overindexing for stuff like charisma and a compelling narrative.
But here’s where things get tricky. “Passion isn’t just something felt,” says Clay Spinuzzi, a professor of rhetoric at the University of Texas at Austin who studies pitching. “Performing passion is a key part of the pitch. That’s an issue, because nervous speakers tend to have flatter affect.” Maybe you really do feel passion. But if you’re nervous, or neurodivergent, or just an eccentric genius, you might not be great at displaying it. No angel capital for you, weirdo!
After your presentation, you get another opportunity to display passion: the Q&A, which is often more important than the pitch itself in gauging the worthiness of the supplicants. But there’s a catch: The kind of questions you get can limit how much passion you can show. And investors tend to ask different questions depending in large part on the gender of the person pitching.
Dana Kanze, an organizational behavior researcher at London Business School, has found that investors tend to ask men “promotion” questions — excited queries about their futuristic visions. By contrast, they tend to ask women “prevention” questions — dry, regulatory crap about avoiding possible losses. And boring questions usually lead to boring answers.
“If you ask me questions around my aspiration for the ideal future state of the business, I can give you a passionate answer that will let you get behind this amazing vision that I have,” Kanze says. “If I’m not getting that question, you walk away like: ‘You know what? That passion and vision didn’t come across.’ And yes, you will raise less money if your questions are predominantly prevention ones over promotion ones.”
Perhaps it won’t surprise you that the research shows white men, in general, are vastly more likely to get funding than any other demographic. That’s because most venture investors are white dudes, and they tend to fund people like them. It’s a phenomenon called homophily, and it manifests in all sorts of subtle and unsubtle ways.
As another of Kanze’s papers demonstrates, companies led by women but making something that stereotypically appeals to men (beer, truck accessories) get less funding than women-led companies targeting women (fashion, hammers for smashing the patriarchy). It’s not that investors explicitly think ladies have bad ideas or shouldn’t have money. They couch their frowny faces at the women-aiming-at-men pitches as worry over a “lack of fit.” As the paper puts it, “Early-stage investment decisions are made under conditions of high uncertainty in the absence of historical track records within the entrepreneurship setting where gender is salient.” Translation: With no data to go on, the venture capitalists go with their gut, and their gut says “women don’t know men like men know men.”
This bias is about more than just garden-variety sexism. This sexism is even deeper than that. VCs are also less likely to give money to anyone who performs behaviors stereotypically defined as feminine, regardless of the sex of the person pitching. Using years of videos of people pitching at an annual university competition, a team of researchers correlated who got funding to ratings of how “feminine” (warm, sensitive, emotive) or “masculine” (forceful, dominant, assertive) the would-be entrepreneurs seemed. Feminine-seeming behavior made pitches less likely to make it to the final rounds, researchers concluded. The title of their paper: “Don’t Pitch Like a Girl!”
So, easy-peasy! To have a successful pitch, be a dude. Even better, be an attractive dude. Research has found that investors say they’re more likely to back a pitch when it’s narrated in a man’s voice rather than a woman’s voice. They’re also more likely to invest in an attractive man’s pitch than an unattractive man’s, or any woman’s.
Also, it helps to exaggerate. Within limits! Obviously, don’t lie. That would be wrong! (And it’d probably get you crushed in due diligence — with some notable exceptions.) One study presented a bunch of angel investors with a fictional pitch (based on an actual healthtech startup) that was tweaked along different axes. Some versions displayed varying degrees of preparedness, thoughtfulness, and coherence about the idea’s potential value and market. And other versions were less than authentic about the real potential of the business.
The investors went for the most exaggerated versions. With no data to go on, they just wanted to be wowed by a big idea. This “information asymmetry” between investors and founders is so great that investors fall back on things like their perceived rapport with founders and their own instincts. Once again, business fundamentals have little to do with it.
The long con
This doesn’t seem healthy. It doesn’t even seem honest. Think hard about all the things that induce an investor to give money to a founder — charisma, trust-building, playing to confirmation biases, leveraged interpersonal networks and “warm intros,” exaggerated claims of future returns — and they don’t sound like the basis for a sound capital ecosystem. They sound like David Maurer’s germinal 1940 book on grifting, “The Big Con.”
Researchers are quick to argue that painting a fanciful picture of the future doesn’t mean founders are lying, exactly. “I don’t mean to convey that what founders say is made up or detached from reality,” says Kish, the media studies professor. “When sociologists talk about imaginaries or speculative futures, it’s not meant to convey that it’s just made-up fantasy. It implies that actors are narrating realities or futures that they want to bring into being.”
I asked other researchers the same question. Is Silicon Valley all chicanery? A house of cards?
“Not a house of cards,” says Spinuzzi, the rhetoric professor. “But definitely a set of biases.”
Another researcher pointed out to me that pitches sometimes turn into actual companies that pay taxes and employ hundreds or thousands of people. Therefore, it can’t be a grift. But that’s a weird defense, because it defines “success” as getting funded rather than delivering on your promises. WeWork turned into an actual company, but the word people most associate it with today is “scam.”
I should note that a lot of the research on pitching has significant limitations. Many papers are based on small surveys rather than experimental evidence. Few consider the actual outcome of investments. Fewer still observe the private pitches where much of the real action takes place, much less what happens after due diligence and deeper dives into founders and their ideas before a deal gets done. I found one paper that showed pitches to investors while they were getting MRI exams, to see what part of the brain lit up when they were feeling likely to invest, which is not a thing. Some papers even use pitches on TV shows like “Shark Tank” as their data. Television is — do I really need to say this? — not real.
But the more solid research puts the lie to the idea of Silicon Valley as a utopia of empiricism. Its unfettered belief in freewheeling, big-ticket plays, in fact, is what sets Silicon Valley apart from other tech ecosystems. As Spinuzzi pointed out to me, one of the main differences between Silicon Valley and the more corporatized approach of Route 128, outside Boston, is that Route 128 relies far less on a tangled meshwork of person-to-person relationships. It relies on good old-fashioned data.
“A serial entrepreneur once pointed out an interesting difference to me,” Spinuzzi says. “In East Coast pitch decks, the most important slide contains revenue figures. In West Coast decks, the most important slide covers the ‘story’ of the problem and solution.”
In the real world, unfortunately, an overreliance on story and narrative can really screw things up. To the movers and shakers of Silicon Valley, a startup isn’t merely a business. It’s a mechanism that leverages techno-optimism to disrupt existing systems, grow exponentially, and change the world. That’s the California ideology, and while it arguably gave us the modern information age — which, thanks? — it also limits what venture capital can accomplish. The most compelling pitches propose to change the world, but that’s tough to pull off when the pitch process itself embodies the world’s baser attributes. As the research shows, the system often operates as little more than a good-old-boy network powered by multimedia performance art. As a result, charismatic megafounders (mostly men) with an exciting vision (as determined by men) get rewarded by investors (mostly men) convinced their biases are just common sense. If I were more entrepreneurial, I might say the whole thing is ripe for disruption.
Adam Rogers is a senior correspondent at Insider.