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Investor Connect Podcast


Investor Connect is for investors interested in learning more about investing in startup and growth stage companies. Experienced investors share their experiences and advice with those who are considering an investment into startups and growth companies. It includes a podcast series of interviews with investors to inform others about the process of funding startups as well as a resource list and a discussion board.  

Topics include sourcing, analyzing, and researching companies. Other topics include valuations, terms Sheets, board of directors, board of advisors, due diligence, syndicates, venture capital, angels, angel networks, family offices, crowdfunding, exits, and more.

Investor Connect is a community program. We welcome your suggestions for speakers and topics which you can send to us through the Contact page. No registration is required to use the resources.  Discussion boards are available to post and answer questions about startups and growth company investing through which registration is required.

Investor Connect is a program under the Texas Open Angel Network which is a 501(c3) non-profit dedicated to the education around startup funding.

Disclaimer: Hall T. Martin is the Director of Investor Connect which is 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 as a basis for investment decisions.

Jan 31, 2023

Clustering Illusion

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

Clustering illusion is a cognitive bias defined by Wikipedia as the tendency to overestimate the importance of small runs, streaks, or clusters in large samples of random data (that is, seeing phantom patterns).

Investors will see a few deals in a space exit and consider it a hot spot for success when in the big picture the sector is no better than any other.

Sectors rotate in and out of favor based on investors' interest in funding that sector.

When a few startups in a sector raise funding, investors often consider the sector a good area to invest in.

After only a handful of deals receive investing interest other investors will flock to the sector to find more deals to invest in.

In analyzing the field of startups, it’s often the case that that sector is no better than any other sector for investment.  

They’re looking for patterns where none exist.

To overcome the clustering illusion, use data analysis to statistically analyze the data.

This will tell you if there’s a real pattern or only the appearance of one.

 

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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