Apr 28, 2023
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
The omission bias is defined by Wikipedia as the tendency to judge harmful actions (commissions) as worse, or less moral, than equally harmful inactions (omissions).
Founders will often omit details rather than give outright lies when pitching their startup to an investor.
Ultimately, in due diligence, all the facts will become known.
It’s not a matter of if, but rather when.
To overcome the omission bias, consider the following:
While you can’t put everything in the first pitch, it’s important to inform investors of key issues rather than letting them find out on their own.
Coming from the founder the investor will consider it a new fact about the startup.
Coming from their own diligence the investor will consider it something being covered up.
Instead of procrastinating make sure you are timely with the information as you are building a relationship with the investor.
Trust is the foundation of that relationship.
It’s best to put everything on the table as soon as possible with the investor so there are no surprises later.
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