Startup Funding Espresso -- Halo Effect

Halo Effect

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The halo effect is a cognitive bias defined by Wikipedia as the tendency for a person's positive or negative traits to "spill over" from one personality area to another in others' perceptions of them. 

Investors often presume those who are good at pitching and are passionate are also good at running the business. 

This often leads to investments in startups that are missing key success factors.

To overcome the halo effect, investors should be aware of it and look for evidence that the founder can run the business.

Investors should have specific criteria for making an investment and should assess the startup for that criteria.

Investors need to have an accurate understanding of the startup's strengths and weaknesses as the investor may need to step in and help fill any gaps.

Keeping in mind the cognitive bias will help investors overcome it and focus on the core aspects of the startup.

 

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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