There are two logics in entrepreneurial decision making: Causal and Effectual.
Let’s understand this in the context of fundraising. If decisions are made using causal logic, the founder makes a list of potential investors and starts sending cold pitches in hope of a kind reply.
Whereas, effectual decision makers go about finding a mutual connect between them and the potential investors. And then use the mutual connect to get warm introductions, which in turn increases their chance of success.
Essentially, in Causal decision making, founders figure their path forward based on some expectation of a future. Whereas in Effectual decision making, founders figure their path forward based on the means they have in hand.
We all can agree that familiarity opens doors and you benefit from the trust created by a warm intro. This also means the investor has less information to process and can listen to the pitch with eager ears.
The founders clearly have to do much more work in a cold outreach as compared to a warm intro. As Jesse Pujji puts it in this tweet, “Warm introductions are worth 10x a cold meeting.”
At PrivateCircle, our aim is to help founders become effectual decision makers. This spirit is embodied in our new product, PrivateCircle Markets, where every investor comes with the shortest path for you to reach them.
As a technology, this is complex but doable through what is called a graph database. You can read more about this in my earlier post.
It is all in the graph, but the question is how do we keep up with the fast pace of investment world? We believe Artificial Intelligence has a role to play here. Over time, relationship intelligence will get internalised in every outreach product, just like AI has become a part of every product experience today.
You can get an early taste of relationship intelligence at PrivateCircle Markets. You will be surprised by who you may find within your reach by simply exploring your second level network.
Feel free to sign up on markets.privatecircle.co and discover your relevant investor matches.
Dive in and explore the possibilities!
