Startup Funding Espresso -- Loss Aversion

Loss Aversion Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Loss aversion is a cognitive bias defined by Wikipedia as the disutility of giving up an object is greater than the utility associated with acquiring it. Investors will continue to hold a position in losing startups because of hating to lose and clinging hopefully to a potential turnaround. To overcome loss aversion startup investors should consider these points: When making an investment consider the funds lost from day one. Any returns will be a pleasant upside. Consider the fundamentals of the business and not just the current status. Treat the investment as a financial transaction and not a personal win or loss. Diversify your investments so one loss is relatively small. Keep in mind the overall position of investments rather than each specific deal. Develop a plan for each investment including follow on funding, early exit options, and tax write-offs if it all goes to zero. 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. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact [email protected] Please follow, share, and leave a review. Music courtesy of Bensound.