For an entrepreneur, traction is very important. It is basically a process of getting the attention of investors. Even if you have an established business you have to think about investors. Your traction is important and it will impact the investors. What you say and how you say it, that will put an impact on the investors’ decision. It is very important to have a brief idea about how to communicate traction to investors.
You have to assure you’re investors that they are investing in the right place. The company will be successful and the money they invest will return and they may have more. For that, you have to show investors your product, the experience you and your team members, your marketing strategy, and feedback from your customers. So they can trust you and agree to invest with you.
What is traction?
So, traction is basically customer validation. The success you’ve seen so far or proved that your customers were there and valid and valuable. It is a way to show how valuable your product is and what you get from the product.
Traction is important for any startup. They need it for the growth of their company. It is proof of your business idea. It also shows that your product has demand among the customers. Good traction makes way to gain revenue. It will easily attract your investors.
How To Communicate Traction To Investors?
Pitching is the known way to get to your investors. So, when you’re communicating with investors, you have to keep in mind they get plenty of pitch every day so you have to pitch them so that you get their attention.
You have to show them the main perspective of your startup. So you have to stand out from the crowd. After that, demonstrating your traction shows the potential of your growth. Show the expertise and experience of you and your team members.
When you’re talking with the investors talk about your product, show them what you need and why you are looking for an investor. Show them why they need to invest in your product and what benefit they will be getting.
Why traction is important
Investors look for good traction so that they can invest in the right place. So when they seek an entrepreneur they looking for:
- What the problem is and how it is going to solve.
- How, you, as an entrepreneur going to solve it
- How you make your sales strategies
Tips to communicate with investors
Show the success stories of your company, data, or the things you’ve done. Convince the investors that they are taking the right steps. Many innovative ideas don’t get investment because didn’t put enough effort into their traction. Things you can do that will help your company to gain success.
- Pre product traction
You can design your product. Ask customers for a willing trial or buy. Or ask customers what they like to add or want for the product. Fix the price for your product. Ask the customers for signup
- At -revenue traction
Show the investors your monthly and annual recurring revenue. You can show them your projected ratio of CAC ( Customer Acquisition Cost) To LTV (Life Time Value). You can also show them your freemium rates. You can also show your investors your landing strategies and how you want to expand them.
If you want good traction for your startup you need to focus on both product and marketing. Convert them into 50%-50%. If you only try to focus on one of them then you will fail. Making a good product is essential for a company but you don’t have to put everything at the beginning. There is an option to advance it later.
The same goes for marketing if you only focus on marketing more than building your product you will fail.
You have to Target your audience; Identify your critical path and stick to it; Look for suitable channels; Build a great management team; Secure a strategic partner; Acquire a good number of customers and generate sales.
Having good numbers of customers will help your company to move forward. If you don’t have any customers right now there’s no need to worry. There are many ways to show even if you don’t have customers. You can show MVP signup how many customers are interested to buy or you can also show them how many have reached through your poll and survey.
This way you can also get the attention of investors. You have to keep in mind your fellow competitors.
Traction is important and needed for any startup. This will help any company to grow further. How you speak and how you present your idea to your investors is very important. Besides that, you have to focus on your marketing and your product.
If you cover up the main idea of your product and show them possibilities, there’s a high chance they will be interested to spend in your startup company. When investors entrust you with their money they are also looking for a good return. This article about how to communicate traction to investors can help you in many ways. Therefore, you have to take traction as your priority for your business.
Read More: Investors’ Guide to Tech Startup Valuation
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