Not Invented Here

Not invented here is a cognitive bias defined by Wikipedia as the aversion to contact with or use of products, research, standards, or knowledge developed outside a group. 

Investors can be biased toward startups that have developed the idea and strategy with the investor’s input. 

This leads to investments into startups that are substandard.

Investors should be aware of the bias and recognize it in their decision-making process.

To overcome this bias, the investor should develop a criteria for investment and check to see how the startup does or does not meet that criteria.

On the other hand, investors may overlook a good startup because they had no part in developing the idea.

To overcome the bias, the investor should become familiar with the business and assess it for what has been done.  

The investor should look for first principles such as the strength of the team and how much traction has been generated.

The investor should be open to new ideas and types of startups as the startup world is constantly changing.

 

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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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
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.