Post Written by Vasily Alekseenko

Traction is a term you hear often in fundraising and startup circles, but what does it really mean for early-stage companies? At its core, traction is about providing evidence that reassures investors you can succeed—or at least mitigate risk if things don’t go as planned.

Here's a simplified breakdown of what traction means at different stages:

Founder Fit Round:

• What it is: This is often the first round of funding, where traction might be minimal or non-existent.

• Investor Focus: Investors are looking for founders who have previously achieved something extraordinarily difficult. If you’ve done something impressive in the past that’s relevant to your current venture, it’s easier to attract investors. This is when having a proven track record of tackling tough challenges can be your biggest asset.

Pre-Seed and Seed Stages:

• What it is: These rounds are focused on the initial stages of your product or service.

• Investor Focus: Investors want to see if your MVP (Minimum Viable Product) or early product is effectively changing behavior. Key metrics here include user retention and referrals. For instance, how many users come back or recommend your product to others?

A Round:

• What it is: This stage typically involves more substantial traction and scaling.

• Investor Focus: At this point, investors are looking for product-market fit. They want to know how many customers are not only buying your product but also repurchasing or recommending it. Here, customers and users are often distinct, with customers being those who pay for the product and users being those who use it.

B Round and Beyond:

• What it is: This stage focuses on scaling and revenue generation.

• Investor Focus: Traction metrics become more about gross numbers, revenue growth, and overall market presence.

In summary, investors look for different types of traction depending on the stage of your company, from founder achievements to customer behavior and financial performance. Understanding these stages and aligning your pitch with what investors are looking for can significantly impact your fundraising success.

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