Traction: What Founders and Investors REALLY Need to Know
In 2022, I wrote a few different pieces on what traction means and looks like for Startups Magazine. It’s worth summarising these thoughts for all the founders being told they “need more traction”, and all the investors who might be missing great opportunities because they don’t know how to identify useful signals.
So, what do early-stage VC Investors think about traction? Summarising and expanding on my Part 1 and Part 2 articles, here are the main takeaways.
Navigating Traction: Insights from Founders and Investors
When you’re a startup founder, “traction” can often feel like a buzzword. You're constantly told you need more of it, but what does it actually mean? And how can you achieve it when it feels like an ever-moving target? As part of my work with Colorintech, I explored these questions with insights from both founders and investors in a series of articles for Startups Magazine. Here's a condensed guide to help you understand what traction truly means for early-stage startups—and how to navigate it better.
What Does Traction Mean to Early-Stage VC Investors?
We asked early-stage VCs: What are the key indicators of success for founders? How important is traction in their investment decisions? Here's what we found:
Optimism vs. Reality
Many founders are overly optimistic about their initial goals. According to Remus Brett, Investment Partner at LocalGlobe, "I don’t think I’ve ever seen a founding team hit their initial objectives for traction [in pre-seed and seed stages]. Especially on the B2B side, it’s always a tougher journey than founders envisage."Key Takeaway: Set realistic, measurable goals. Investors value well-defined targets over overly ambitious projections. Your ability to demonstrate disciplined planning and a solid understanding of your market will build trust and credibility.
The Human Element Matters
While financials and growth numbers are crucial, many VCs also look at the founder's personal qualities. As Ella Shen from Forward Partners points out, "Self-awareness, insightfulness, adaptability, risk management, passion, and grit are all strong markers of success in early-stage founders."Key Takeaway: Highlight your self-awareness and adaptability. Show that you understand your strengths and weaknesses and are prepared to pivot when necessary. Investors want to know you can learn and adapt.
Focus on Engaged Numbers, Not Just Big Numbers
Andy Davis of 10x10 emphasizes, “I care about engaged numbers… even 10 people who are obsessed with this, that’s what I want to hear about."Key Takeaway: Don’t just aim for large numbers. Prove that you have a deeply engaged user base. Investors are looking for passion and commitment from your customers, even if it’s a small group.
Why Do Underrepresented Founders Struggle More with Traction?
A critical finding from Colorintech’s research was understanding why underrepresented founders often struggle to "get traction."
Assumptions Can Be Wrong
As Sohaib, Founder of &facts, stated, “We originally assumed who our customers would be, but that turned out to be wrong.” Early assumptions about your customer base can easily lead you astray.Actionable Insight: Invest time in understanding your real customers. Continuous market research is not just important; it’s essential.
The First Customer Is the Hardest
For many B2B startups, the initial sale is often about who you know. Founders must learn to think like their customers and communicate effectively to secure that crucial first deal.Actionable Insight: Network strategically. Attend industry events, participate in online communities, and leverage any connections you have to reach the decision-makers who matter.
It’s a Marathon, Not a Sprint
A great business stays off the ground. Many underrepresented founders struggle initially because their product-market fit isn’t right, or they haven't mastered how to communicate their value proposition.Actionable Insight: Be prepared to iterate. Keep refining your product and messaging until you find the right fit for your market.
Advice for Investors: Bridging the Gap
While founders work tirelessly to refine their products and grow their networks, there is still a gap where investors can better support underrepresented founders. Here’s how:
Take Calculated Risks
As Sohaib, Founder of &facts, suggests, “Take a chance with someone you wouldn’t normally. Don’t just look at ‘ex-big brand’ company founders.”Small Steps, Big Impact
Audrey, Founder of Kweevo, adds, “Underrepresented founders need just enough to start; they don’t always need big fundraising rounds in pre-seed.”
Final Thoughts: Action Steps for Founders and Investors
Founders: Focus on realistic goals, cultivate self-awareness, and build a deeply engaged customer base.
Investors: Look beyond traditional markers of success and be open to supporting diverse talent with unconventional backgrounds.
Call to Action: Let's Reimagine Traction Together
If you're a founder, take a moment to reassess your current traction strategy. Are you setting realistic goals? Are you engaging with your audience meaningfully? If you're an investor, consider how you can broaden your perspective to include more diverse founders.
By bridging the understanding gap between founders and investors, we can create a more inclusive and successful startup ecosystem.
*image courtesy of slidesgo
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