The Secret to Pitching
Lakshmi Balachandra is a former entrepreneur, improv comedian and venture capitalist. She now works as a professor at Babson College, studying negotiation, pitching and trust development in the world of entrepreneurship. She talks us through how best to engage potential investors, partners and clients, and how to avoid mistakes that can kill a deal.
What are investors really looking for when they sit down to hear a pitch?
They always say “passion.” But I’ve tested it, and they don’t want passion. I spent two days with the Tech Coast Angels [a large network of investors in Southern California], interviewing them, running surveys, reviewing 101 pitches they received. And while they think they want the crazy guy in the garage, they don’t. They want someone who is calm, composed, who can lead. Someone coachable, humble and open to critiques. Someone they can trust.
How do they decide if an entrepreneur is trustworthy?
Trust research shows, theoretically, that when trust develops it’s either character-based or competency-based. Character is about benevolence and integrity -- basically, if you think someone is a good person. And competency is about ability, measurable intelligence. In the context of pitching, I expected the development of trust to be based on competence. But my research found the exact opposite. VCs put more weight on character. You can be the most competent person in the world, but if you’re a jerk, you’re not going to get invested in.
What are some of the easiest mistakes to avoid during your pitch?
We recently completed a language study using pitches from the MIT Elevator Pitch competition, where real entrepreneurs have 60 seconds to pitch VCs for a cash prize. We used word search and psychology software to analyze what was effective or not. Words and phrases related to satisfaction and inspiration -- happiness, joy, thanks, I feel lucky, I’m confident -- get positive responses from VCs. Anything that implied uncertainty -- could, perhaps, might -- was a turnoff, as well as referring to your projects as “work.” When you indicated how hard you had worked, it was off-putting.
You’ve spent a lot of time studying gender and how it relates to success in raising capital. What’s the most surprising find?
Despite what other studies have shown, we didn’t find a bias against women. But we looked at the behaviors of people making pitches, and categorized them based on the stereotypes around masculinity and femininity -- men are assumed to be more confident, aggressive and bold, and women are supposed to be more expressive. And while there was no bias against women, “feminine” behavior, regardless of gender, was poorly received.
You used to be an improv comedian, which now plays into the courses you teach. Where’s the intersection?
In improv, the term you train with is “yes and,” which means you have to accept whatever has happened and move with it. You have a very short amount of time to produce a product -- a laugh -- and the only way to do that is to be hyperaware of your surroundings. As an entrepreneur, during a pitch, you need to read cues, recognize an opportunity and build on it. The number one rule is listening, and learning to step aside from your script and understand why the investor is asking you a certain question or making a certain comment, and adjusting appropriately. It’s listening in a different way -- less about the words and more about the emotion -- and it’s really hard to do, especially in the moment.