Pitch perfect: when entrepreneurs display warmth, they’re more likely to land funding

Every day, entrepreneurs pitch ideas to investors, carefully honing their proposals in hopes of landing game-changing funds. But according to a surprising new study from the UBC Sauder School of Business, most persuasion doesn’t come from the words entrepreneurs say; it comes from how they say them. 

And investors beware: the study also shows that when it comes to startups, the best pitches don’t always make for the best investments. 

For the study, titled Persuading Investors: A Video-Based Study, researchers developed a machine-learning algorithm for processing video that allowed them to closely analyze elements of persuasive communication — things like facial expressions, tone of voice and word choice. 

The algorithm could distinguish between positive and negative visual emotions, vocal emotions, textual sentiment and other psychological features. For example, it could detect if the person sounded powerful and convincing, or if they were smiling and showing positivity. It also catalogued other factors such as age and gender.

The program then generated what the researchers called a “Pitch Factor” — that is, an overall measure of how well the startup team delivered the pitch and demonstrated attractive traits such as happiness, passion, warmth and enthusiasm.

From there, the researchers applied that high-tech algorithm to more than 1,000 real-world videos of entrepreneurs pitching investors in hopes of landing coveted early-stage funding. 

They found the teams that scored highest on Pitch Factor — that is, they showed the most positivity and passion — were more likely to obtain funding. In fact, even a modest boost in Pitch Factor led to a whopping increase in the probability of landing an investment. 

“If you smile for ten seconds more within a 60-second video, there will be about a 15 per cent increase in the probability of the startup being invested,” says UBC Sauder Assistant Professor Dr. Allen Hu, who co-authored the study with Song Ma of the Yale School of Management. “That’s the baseline effect.”

But the long-term outlook for investors wasn’t nearly as rosy. In another analysis, researchers tracked the long-term data for the companies that were pitched, looking at employment, development and business survival rates, as well as milestones such as landing further financing, or achieving an IPO or acquisition. 

Interestingly, many of the positive pitch characteristics were actually associated with poorer long-term performance. Dr. Hu says it’s likely because investors “lower the bar” for startups that show positivity and passion, which in turn lowers the likelihood they’ll consistently choose future winning investments.

“It isn’t that positivity is a bad thing; in fact, positivity is a good thing, and a valuable communication skill. It comes down to a selection problem. Investors love positive teams so much, they’re willing to invest in teams that aren’t that good,” says Dr. Hu. “But teams with positivity and great ideas almost always perform very well.” 

The UBC study also revealed a concerning gender gap. The researchers found that when women pitch solo, and they display less passion and positivity, they are nine times more likely to be penalized than men. When women and men pitch together, women’s pitching style had little impact, which means the women are essentially overlooked. 

“Only the facial expressions and tone of voice of the male cofounders affect the final investment decision. For example, even if the female cofounder speaks for 40 out of the 60 seconds, it doesn’t affect investors’ decision making,” says Dr. Hu. 

When women pitched alone, he adds, investors paid more attention to superficial factors such as subpar vocal delivery and facial expressions instead of the quality of the female entrepreneurs’ ideas, their education, their previous work and their entrepreneurial track record. “Investors are letting good investment opportunities go — and there’s a strong financial incentive to change that, because at the end of the day, they want to maximize their returns.”

The study is the first of its kind to link pitch performance and funding outcomes — and because it relies on real-world companies, it’s especially compelling. It’s also the first to assess the impact of multiple factors — voice, visual and text — simultaneously.

Dr. Hu says the study relied heavily on cutting-edge AI technology, and wouldn’t have been possible even five years ago. The research team has since made the coding available for free online, ensuring that future researchers can perform similar kinds of video analysis. 

As a result of the findings, says Dr. Hu, investors should carefully examine how they’re making their decisions, and focus more on hard data such as the feasibility of ideas, previous experience and education, “instead of being distracted by big smiles.” Entrepreneurs, meanwhile, should hone their communication skills and find ways to convey warmth and passion, says Dr. Hu — including through those big smiles.

“Absolutely, on the visual side, smile more. Vocally, sound more passionate and more powerful, more confident. And verbally, if you want to leave a good first impression, talk about doing something together, and about how you can help,” advises Dr. Hu. “Just try to build connection and warmth.” 

Persuading Investors: A Video-Based Study appears in the October 2025 issue of The Journal of Finance.