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Although video conferencing has been crowbarred into our business lives, it’s actually turning out to be a hit for many people, not least for those working in the fast-paced world of venture capital.
The CEO of SoftBank, one the world’s biggest investment firms, said he likes to talk business on Zoom during dinner, while the debate rages on across social media. Some investors think there’s no turning back.
Now one leading academic has highlighted just how effective video communication can be, after carrying out research involving 1,855 participants across 12 different studies.
Chia-Jung Tsay has been exploring the power of dynamic visual cues, like gestures, facial expressions and body language, during business pitches. And it appears frozen frames and weak connections don’t really matter.
“Even when Zoom reduces the amount of exposure, or level of visual richness, you can still convey the right types of information,” said Tsay, associate professor at the UK’s UCL School of Management.
Some of her research into entrepreneurial pitch competitions involved downgrading the video quality to such an extent that the audio was muted, or participants could only be seen as outlines — an effect she likens to the dancing silhouettes in the early Apple iPod commercials.
“We’re still able to pick up on some things that investors see, and say: this is the one to invest in,” Tsay said. “These days, everyone thinks ‘oh no, someone’s frozen again!’, or the connection isn’t that great, or it’s choppy. That’s the kind of thing I study. Even with these alterations, people are still able to pick up something.”
UK startup accelerator Founders Factory switched over to live video events in March last year, and since then has held five showcases for investors and entrepreneurs. It was surprised at their success, as it saw an 80 percent turnout for the events, compared to what it claims is the industry standard of 50 percent for an in-person event.
Last year it facilitated 50 deals fully remotely, raising $100 million for its startups.
“Anecdotal feedback from investors has been positive, noting the high quality of the video production and ability to share with colleagues and rewatch the pitches,” said Kelvin Au, its head of venture. “Some told us that it brought back a real sense of normality for them being able to attend.”
Tsay said livestreamed events are well suited to scenarios that involve large numbers of pitches, but admitted that investors and entrepreneurs do eventually seek out a “physical presence” to feel what that connection means.
“Venture is a very human business,” agreed Dan Ruch, venture partner at RHO Capital Partners. “You look for traction, you look for a category that’s exciting, but more than that you look at the founder. Video is an efficient way to speak to someone, but it’s not a good way to get to know a human being.”
Personal relationships came into play for one technology startup last year, as it sought to raise more money after identifying a coronavirus-related gap in the market.
“We realized the energy and marine sectors were booming, with people at home using more energy and ordering more items online — requiring more shipping,” said Neil Ruth, co-founder and chief commercial officer at business travel platform TapTrip. “Shipping company Maersk said it was running out of shipping containers, so we launched a beta product to help get crews to rigs, ships and other destinations.”
Ruth said he turned to previous investors that took part in its pre-seed round for help, including ATPI, Barclays and Techstars. “They know us, they know the team, but more importantly we have trust, something incredibly difficult to forge over video, particularly when you’re talking millions of pounds,” he said.
He managed to raise $2.4 million.
Meanwhile, Founders Factory’s Au noted that deals are taking longer to complete in a digital environment. “What would have typically been done in six to eight weeks is doubling, because if you haven’t met the founders you want to do more referencing, and get to know them more or for longer, to see how the business progresses over that time,” he said.
Teaching New Ways
After spending almost an entire year relying on video conferencing, businesses are adjusting. And with borders in most regions around the world still closed, the corporate travel sector’s rebound is uncertain this year.
The cultural shift hasn’t gone unnoticed at Les Roches Crans-Montana hospitality school in Switzerland, where students are being taught to prepare for a drop in meetings and events.
“We are debating the impact of video on business travel everyday in my Revenue and Innovation class,” said Riccardo Campione, one of its academic instructors. “Hotels will drop meetings and events segments as companies will cut back on travel and expense, as meetings on Zoom are much more effective from a cost and logistics perspective.”
Campione added hotels are also getting back to “old-school hospitality” by transforming meetings rooms into leisure spaces.
“Everything is moving towards a ‘local’ mentality away from global. You might find a hotel with grocery services rather than a business center,” he said.