The "Branching Effect" happens when you accept an intro to an investor from someone who hasn’t invested in your company. This can be risky because it signals to the new contact that the introducer isn’t fully confident in your startup. If the potential investor knows the person making the intro hasn’t committed financially, it can raise doubts, making them more likely to say no. Additionally, when one investor declines, others often follow suit, creating a snowball effect of rejections. To keep strong signals in the market, prioritize intros from people who have invested and shown real commitment to your success.
Credit: Daniel Jacker