Traction
The ultimate startup dilemma
You need funds to get it, but investors want to see it before they’ll give you money. What should a founder do in this situation?
Why traction is important
You need to demonstrate some sort of traction to investors to get funding. The more traction you have, the more investable you are. Traction helps investors understand how fast you’re growing, how the funding they provide will be used and how they could eventually gain from the investment.
Run demand testing
Investors want evidence that there’s a demand for your product. Can you show that people want to pay for your product?
KPIs Investors Look At
Investors focus on key metrics to gauge a startup's potential. These include Monthly Recurring Revenue (MRR), Year-over-Year (YoY) growth, Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), churn rate, market share, Total Addressable Market (TAM), burn rate, gross margin, EBITDA, product development milestones, user engagement, lead conversion rate, and customer retention rate.