Apr 25, 2023
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
The money illusion effect is defined by Wikipedia as the tendency to concentrate on the face value of money rather than its value in terms of purchasing power.
In pricing the product, a startup should list their product price in the smallest unit possible such as daily cost rather than annual cost.
For example, if the price of the product over a year is $2000, then list the price as $5 per day rather than $2000 per year.
The smaller dollar number will attract more customers.
Startups raising funding should focus on what the funds will buy rather than the dollar amount alone.
In fundraising, the founder needs to take into account the impact of inflation.
Funding buys services that build a business and grow it.
Inflation eats into those funds and reduces the runway of the company.
Founders should keep in mind the impact of inflation on their cash runway.
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