Anchoring

Anchoring

January 23, 2023 by investor

Anchoring

Anchoring is a cognitive bias defined by Wikipedia as the tendency to rely too heavily, or “anchor”, on one trait or piece of information when making decisions (usually the first piece of information acquired on that subject).

Investors tend to attach to the first thing startup pitches and stick with it.

If the startup positions its deal as a service such as providing education technology, investors will view it as an ed-tech service.

On the other hand, if the startup positions their deal as a software as a service business, investors will home in on recurring revenue streams and will look for metrics in that category.

How you position your business at the beginning of the pitch is how most investors will look at it throughout the pitch.

Consider positioning your deal upfront for the investor audience you have.

Position it as an ed-tech service for investors focused on education.

Position it as a software-as-a-service deal for investors focused on recurring revenue.

Position it as a social impact deal for investors focused on impact investments.

Don’t fight the anchoring effect by mispositioning your deal for the investors you are pitching. 

Use anchoring to connect your deal with the investor.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

 


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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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