Richard Sudek wrote an interesting article in 2007 on “How Entrepreneur Enthusiasm, Trustworthiness and Venture Attributes Affect Angel Investment Decision Processes”. Dissertation – Claremont Graduate University
This is an interesting topic for me, because I believe trust is the currency of business. I wrote a blog on the topic. A key learning for me after 11 years at yet2.com is people are more important than technology in deal-making. This study supports that view.
This article is a dissertation of 121 pages including survey results from other scholars. The author points out that entrepreneur’s enthusiasm and trustworthiness are placed as top criteria used by angels in their funding decision. Sudek emphasizes the importance of trustworthiness for the success of the entrepreneur. Whether an angel likes the entrepreneur is also very important. Sudek comments that the entrepreneur is the most significant factor that influences angels and VC’s to finance the new venture.
The author also considered age, gender and experience of the entrepreneur as potential factors that can influence finding decisions, but he didn’t find significant trends and correlations.
Factors for successful business pitches:
Enthusiasm and passion of the entrepreneur (coupled with extraversion)
Trustworthiness of the entrepreneur
Entrepreneurs demonstrate ability to manage the new venture
Entrepreneurs demonstrate that there is a market need for their product
The entrepreneur demonstrates expertise
Entrepreneurs are skillful in ingratiating themselves during meetings with VC’s
Entrepreneur conveys honesty in his/her presentation