The modality effect is a phenomenon defined by Wikipedia whereby memory recall is higher for the last items of a list when the list items were received via speech than when they were received through writing.
In a startup pitch, the last slides are the ones that the investors will remember most.
These are not necessarily the most important slides to consider.
Investors should be aware of the modality effect to mitigate it.
To overcome the modality effect, consider the following points:
Investors should take notes during the pitch and capture the most important aspects of the deal.
Identify the key risks that must be overcome.
Also, take note of the key value propositions in the deal.
In diligence consider these factors.
Raise questions on the key risks and value propositions in the deal to understand it better.
Investors should consider what are the most salient features of the deal and explore those before investing.
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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.