Actions Speak Louder than Words: How Figurative Language and Gesturing in Entrepreneurial Pitches Influences Investment Judgments

Abstract

A key challenge for entrepreneurs is to convince investors of their business ideas in a pitch. Although scholars have started to explore how entrepreneurs convey their passion and preparedness in a pitch, they have overlooked the possible variation that exists in the verbal and nonverbal expressions of entrepreneurs. We build on research in cognitive science and entrepreneurship to examine the nature and influence of specific forms of speech and gesturing used by entrepreneurs when pitching. In an initial qualitative field study we identify distinct pitching strategies entrepreneurs use, involving different combinations of verbal tactics (i.e., using literal and figurative language to frame a venture) and gesture (i.e., using different types of hand gestures to emphasize parts of their pitch and convey product and venture ideas). In a subsequent experimental study with samples of investors and students, we examine the impact of these strategies on the propensity to invest. We found that although variation in the type of language used by an entrepreneur had limited effects, using gestures to depict and symbolize business ideas had strong positive effects. Our findings indicate that the skilled use of gestures by entrepreneurs helps potential investors imagine aspects of a new venture for themselves, thereby enhancing perception of its investment potential.

The promise of social signal processing for research on decision-making in entrepreneurial contexts

“…In other words, nonverbal behavior like facial expressions and gesturing as well as the verbal content during the interaction can change people's prior assessment of an individual's characteristics and specific qualities for better or for worse, and, hence, their subsequent decision. Finally, recent evidence points at nonverbal behavior as a means to emphasize certain parts of the verbal content of speech (Clarke et al 2019) and so, we propose a moderating effect of nonverbal behavioral cues on the relationship between verbal behavior and decisions relevant to entrepreneurs. Based on the conceptual framework, we theoretically derive a total of five propositions that we hope will be subject to thorough empirical analysis in future studies.…”

“…During those meetings, individuals tend to behave in ways that increase their chances for a favorable decision by the entrepreneur, both verbally and nonverbally (Gilmore et al 1999). Also, entrepreneurs themselves often try to persuade others, for example to receive (additional) funding, both through verbal and nonverbal behavior (e.g., Chen et al 2009;Clark 2008) and through the use of visual symbols or gestures (Clarke 2011;Clarke et al 2019). Impression management behaviors are argued to increase others' perceptions of the legitimacy of the firm (Fisher et al 2017;Nagy et al 2012), which, in turn, may lead to increased funding (Pollack et al 2012).…”

“…In many previous studies, coders or raters are used to assess and manually categorize the social signals sent by all individuals involved (e.g., Clarke et al 2019;Maxwell et al 2011). SSP has a number of advantages as compared with those more traditional data processing methods.…”

“…Entrepreneurs' nonverbal behavior also moderates the relationship between their nonbehavioral cues and investment decisions. Clarke et al (2019), for example, have found that using hand gestures to depict and symbolize business ideas had strong positive effects on the propensity to invest. They found that the skilled use of gestures by entrepreneurs helps investors to imagine aspects of the products and businesses that were conveyed partially through the pitch content.…”

“…In the case of decisions made by others yet affecting entrepreneurs, a vast amount of studies focuses on how business angels and venture capitalists arrive at their investment decisions (e.g., Maxwell et al 2011;Petty and Gruber 2011). Many of those have investigated entrepreneurial pitches as a particular setting in which investors judge business ideas and note that their funding decisions are generally influenced by what is being said and done by the entrepreneurs (Ciuchta et al 2018;Clarke 2011;Clarke et al 2019;Pollack et al 2012). In particular, both the verbal content of the presentation and the presentation style are considered important (Chen et al 2009;Clark 2008).…”