Startup Funding Espresso – Law of the Instrument

Law of the Instrument

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

The Law of the instrument is a cognitive bias defined by Wikipedia as the over-reliance on a familiar tool or method, ignoring or under-valuing alternative approaches. 

"If all you have is a hammer, everything looks like a nail."

Investors use the deal flow and screening process they are most familiar with.  These tools can favor some deals over others.  

Deal flow channels provide a certain type of deal flow which may or may not be the best available.

Explore other deal flow channels to find better deals.

Also, the investor’s screening process focuses on specific aspects of the startup such as team, traction, or market size.

Consider other screening criteria to find better deals.

From these efforts consider updating your deal flow and screening process overall.

As startup markets change and evolve, new business models and market conditions prevail.  

New models and markets often need new deal flow and screening processes.

Explore how other investors find and screen startups and compare them to your own.

 

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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