Startup Funding Espresso – Mere Exposure Effect

Mere Exposure Effect

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

Mere exposure effect is a cognitive bias defined by Wikipedia as the tendency to express undue liking for things merely because of familiarity with them.

Angel investors are much more likely to invest in deals in which they have more exposure to it. 

This can lead to investments in substandard startups.

To avoid the mere exposure effect, the investor should first recognize it as a bias and keep it in mind when reviewing startups for funding.

The investor should ask the question, "why invest in this startup?" and check for the answer.

If it’s because the startup is familiar but the team, product, or market is not outstanding, then it should be a pass.

While familiarity may give the investor more information about the startup it should not stand in for proper diligence.

The investor should have a set of criteria by which to judge startups and should use that criteria in testing them for funding.

 

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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