Halo Effect
Definition
Halo Effect: The halo effect in startups refers to the positive bias that comes from association with prestigious investors, accelerators, advisors, or customers. A company backed by top-tier VCs or accepted into Y Combinator often receives more attention, better talent, and favorable terms due to this association, regardless of underlying fundamentals.
Example Usage
“The Sequoia investment created a halo effect - suddenly enterprise customers took our calls and top engineers wanted to interview.”
Common Misconceptions
Related Terms
Venture Capital
Venture capital is a form of private equity financing provided by firms (VCs) to startups with high growth potential. VCs raise funds from limited par...
Accelerator
An accelerator is a fixed-term program that provides startups with mentorship, resources, and often investment in exchange for equity. Programs like Y...
Advisor
An advisor is an experienced professional who provides guidance to startups in exchange for a small equity stake (typically 0.25-1%). Advisors offer e...
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