Frequency Illusion
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Frequency illusion is a cognitive bias defined by Wikipedia as the illusion in which a word, a name, or other things that have recently come to one's attention suddenly seems to appear with improbable frequency shortly afterward.
This comes from the mind's selective attention kicking in when hearing something new.
The mind then starts to look for that pattern elsewhere.
After an investor learns of a startup solving a new problem the investor seems to hear about that problem more often even when there’s no true frequency.
This gives the investor the impression the startup’s application is more prevalent than it really is.
To overcome the frequency illusion, an investor just knowing it as an effect can realize the startup’s focus is no more prominent than other startups' focus.
The investor should research the application area to fully understand the magnitude of the problem and its prevalence.
Quantitative analysis will clarify the market size providing a better understanding of the startup’s potential.
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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