Context Effect

Context Effect

May 23, 2023 by investor

Context Effect

Context effect is defined by Wikipedia as cognition and memory are dependent on context, such that out-of-context memories are more difficult to retrieve than in-context memories

Investors need context in order to understand the startup offering such as the problem to be solved.

In pitching founders include basic concepts in the presentation.

The problem, solution, and product must be defined upfront.

With context, the investor can understand the rest of the pitch such as the business model, competitive advantage, and market positioning.

Investors are familiar with the standard list of business models, go-to-market strategies, and revenue models.

By connecting to these standards, the founder will find the investor more easily grasps the business of the startup.

For example, if your business provides a marketplace matching buyers to users, then highlight the term marketplace business model in your presentation.

Show how your business fits the marketplace model in terms of users, monetization, and metrics.

Make it easy for the investor to grasp what you are doing with standard startup models.

By showing how your business fits into the startup ecosystem, investors will retain it better.


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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.