New research from the University of California, Berkeley, and Columbia Business School reveals that highly energetic fundraising pitches elicit negative impressions from investors. The findings suggest that an optimal level of enthusiasm is critical in persuading investors.
The researchers recruited 152 entrepreneurs to watch pitch presentations for the TV reality show 'Shark Tank' and analyze the entrepreneurs' emotional expressiveness. They found a parabolic relationship between emotional display and investor interest. Specifically, an optimal level of enthusiasm led to the most positive outcomes with investors.
Surprisingly, the negative effects of intense emotional presentation were consistent even when considering the entrepreneur's experience, expertise, company quality and the specific investor they were pitching to.
The researchers believe this emotional backlash may occur due to an imbalance of power dynamics. When entrepreneurs display excessive emotions or enthusiasm, investors might perceive them as lacking control, competence or professionalism, which could impact their trust in the entrepreneur and the business idea.
These finding provide insightful guidance to entrepreneurs seeking investments, showcasing that a strategic balance of passion and professionalism is essential to successfully attract investment capital.
