Startup Funding Espresso -- Default Effect
Default Effect Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. The Default effect is defined by Wikipedia as when given a choice between several options, the tendency to favor the default one. It\u2019s also called the Status Quo bias in which people choose the default option because it\u2019s less risky. Startups should position their deal as the default so that in case of a tie, the investor will choose their startup over others. To make your deal the default, consider the following: In many investment groups, the favorite pitch is the one investors choose to invest in even if diligence shows other deals to be stronger.\xa0 Some investors favor deals that are similar to past investments and so choose them because they consider the deal to be the current standard. So make your deal the favored pitch by presenting it as a standard deal. Align your deal with past investments by the investors to position it as the \u2018default.\u2019 Startups that are outside the norm are considered riskier. Show how other investors are already in the deal and why they invested. Position your deal as the \u2018safe\u2019 choice because the risks have been mitigated and other investors have \u2018set the standard\u2019. It\u2019s often the case that the investor fails to grasp the pitch because there are too many key points missing from the presentation. Make sure you include in the pitch all the values in the deal. \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .