Accredited investors finance more than 75,000 U.S. startups annually. We explain how training aspiring entrepreneurs to pitch their new business ideas to these investors affects their odds of continued funding discussions. We model accredited investors’ decision to continue investigation as a real option whose value is a function of their experience and the information contained in the entrepreneurs’ pitches. We derive four hypotheses from the model, which we test through a field experiment that randomly assigns pitch training at four elevator pitch competitions. The data support all four hypotheses and are inconsistent with alternative explanations.
A newer version of this paper (published in 2022) contains further analysis.
Pitching score from judges, number of recommended elements included in pitches.
Pitch training increased the use of best-practices elements in pitching by around one third of a standard deviation.