Without traction your pitch is like the work of fiction for all the lovely people sitting in the audience. Nice to hear but… they (especially the business people) need proof. And that is precisely what showing traction is supposed to provide. THE PROOF. It is intended to work on the rational part of the brain. After the flirtatious and emotional intro where you name the enemy, when you say that „hell is real” and you present the solution you need to show the business potential – and tell people why it needs to be done right now and right here.
Let’s imagine you start a great pitch. You introduce yourself with one catchy line that establish your alpha power, you show the context, explain what is wrong with the world today and you show us a glimpse of the promise land. It is time to prove that there’s a room for this solution. It’s time to show traction. Again, remember that audiences and investors are skeptical. So you must give them evidence that the future you’ve laid out is, indeed, attainable. Traction is what investors care more about over everything else. It simply is a measure of your product’s engagement with its market. What is also important is that the investors care most about actual traction in a seemingly large market. you can and should demonstrate it with either:
- profit you’ve made so far
- revenue
- number of customers or users
- media coverage
- verified through methodological research hypotheses
Profit and revenue work best as they show product-market fit really well. And they are convincing. The hypotheses (even well verified) are least convincing. Showing the business potential is about convincing the audience and the potential investor that there is a room for your solution and that it is out there not because you and your friends think so but because you have something to prove it.
When talking about the business potential you need to also think about how to show that this is the best moment to actually introduce your solution. In her above mentioned pitch Cindy just strongly states the obvious by saying today the research funding is broken. And that very word ‘today’ is important. Your goal is to explain why it is urgent to act right now. Is it because the problems are growing bigger and soon may be difficult to deal with. Is it because the life quality of your customers is decreasing daily. Or maybe because the new available technology makes something possible for the very first time. Whatever the problem and the potential proof you can probably fit it into one of the following factors: technological, social, economical.
The social factors are all the trends and social forces that clearly indicate that there is room for your solution. It maybe the change in the way people behave. Some general social trend that shows clearly that the solution you are presenting is needed or could be needed. The economical factors are clearly linked with the social ones as economy is nowadays a lot more about psychology than maths. For example “shared economy’ is clear trend that is both social and economical. Technological forces are easier to distill. They are simply the changes and new technologies that allow things to happen. Like front camera or a nanotechnological breakthrough.
Using trends is a good idea to support your hypotheses. But remember that you have to have bullet proof theory and it’s best to throw some stats and reports. It’s also good to include some data (if available) you’ve gathered yourself. Investors want to invest in startups that will be successful with our without them. So never ever pitch just an idea. An idea is not a product. And potential is not and cannot be measured by your wishful thinking. A story without traction is a work of fiction and investors (even the kind ones) do not want fairy tales. Plus it’s better to be honest. If you cannot prove the product-market fit then maybe there is no place for the product. Maybe what the world needs not is not your app.
Whatever the situation – investors care most about actual traction in a seemingly large market.
Traction is not everything but if you have incredible traction in a large perceived market then you can raise money regardless of what the product looks like indeed. It can be hideous, not so user friendly. But if you have relatively smaller traction your product is a lot more crucial. And if you have no traction… Well, prepare a great demo and research the trends to support your hypotheses. Never ever show the potential base only on your convictions. Ideas and convictions work in politics. They do not convince people in business. For investors the product/market fit is what matters. And it should as BAD product/market fit send the startup where it belongs–to a business purgatory where they can only pivot or ‘die’.