Many investors look for traction in a startup to gauge their progress.
Traction stated as a single number on a pitch deck can be hard to judge as sufficient for an investment.
Many investors tell the startup “nice traction, but we’d like to see more.”
Instead of traction look for momentum.
Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, fundraise are the core four to look at.
Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression.
Momentum must be shown over time in numerous updates by email, phone, or in person.
It takes four touches before an investor gets a sense that there is momentum and it will continue.
Startups should always have some engagement with customers ongoing- such as alpha testing, beta customers, MVP customers, etc so as to have something to talk about with investors.
For startups pursuing the enterprise sale show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, ongoing support.
Show how prospects are moving through the funnel and customers are upgrading and expanding seats.
It’s the continuing forward progression that counts.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.