Fri, 3 February 2023
Continued Influence Effect Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Some investors will hold onto their preconceived notions even when presented with corrected information. For example, a startup positions their company as providing a service but they don’t mention they have recurring revenue. Recurring revenue shows scalability while service businesses typically do not. Even after the investor learns about the recurring revenue, they will continue to view it as a service business lacking scalability. The startup may correct its misinformation which is often an omission. But the investor may not consider the startup as valuable as if they had started with the correct information. To correct the misinformation, having the CEO make the clarification as an authority can help overcome the bias. Show the reason why the misinformation occurred so it’s clear it came from faulty or outdated information. Have a third party confirm the corrected information as it brings a neutral perspective which can often sway investors. It’s best to avoid misinformation to begin with as it can take a great deal of time and work to overcome it.
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