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 rather than what the investor actually thinks.

The investor spares the feelings of the startup but in the process withholds feedback the startup needs to hear. 

Feedback should be candid and honest even if it’s not all positive.

If the feedback is all positive and nothing negative, it may be a sign that the investor is under courtesy bias.

Consider giving a more balanced view of the startup with both positive and negative feedback so the startup will learn from the experience and have something to work on.

Another form of courtesy bias is investors who hide their social, political, or other leanings.

For example, some investors believe that only those from their social or political circle are reliable investments but they call out some other facet of the startup for passing.

To overcome the courtesy bias, investors should take note of the deals they fund and identify factors swaying their decision.

 

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.