Continued Influence Effect
Continued Influence Effect Some investors will hold onto their preconceived notions even when presented with corrected information. For example, a startup positions their company as providing a service but they don't mention they have recurring revenue. Recurring revenue shows scalability while service businesses typically do not. Even after the investor…
Courtesy Bias
Courtesy Bias Courtesy bias is a cognitive bias defined by Wikipedia as the tendency to give an opinion that is more socially correct than one's true opinion, so as to avoid offending anyone. Courtesy bias arises when an investor tells the startup what they think the startup wants to hear…
Base Rate Fallacy
Base Rate Fallacy The base rate fallacy is a cognitive bias defined by Wikipedia as the tendency to ignore base rate information (generic, general information) and focus on specific information (information only pertaining to a certain case). One-off sales to specific companies while helpful do not define the startup's growth…
Clustering Illusion
Clustering Illusion Clustering illusion is a cognitive bias defined by Wikipedia as the tendency to overestimate the importance of small runs, streaks, or clusters in large samples of random data (that is, seeing phantom patterns). Investors will see a few deals in a space exit and consider it a hot…
