February 11, 2020 – Investors hear A LOT of pitches but in the end only fund a very small percentage of companies. If you ever wondered what criteria they use, Xiang Hui, Assistant Professor of Finance found out “nice people finish last”. She and her research partners examined 332 pitches from the first five seasons of ABC’s reality show, Shark Tank. They explored the relation between impressions of the contestants and investor decisions and put them into two categories: competent/confidence and appearance/likability.
And while first impressions carry a lot of weight, competence and confidence win out in the end. Both hard and soft information contribute to decision making and “the Sharks offered more cash and higher valuations to competent and confident entrepreneurs.”
To read the full article see page 46 in the 2019 Olin Business Magazine.