Traction is important to any startup. It can be used to show that your problem is actually something your customers care about or that customers actually want to buy what you're selling. It's a great signal to investors that your idea has some merit. Unfortunately, I see many founders miss this opportunity and just fill a slide with logos and bury it in the second half of their pitch deck. Let's take a look at some of the common mistakes founders make when presenting traction and how to avoid them.
The Many Markers of Traction: Why You're Getting the Side Eye
Broadly speaking, traction is the support or interest your company needs to succeed. So what is traction for your startup? Is it recurring revenue? total revenue? demos? customers in your pipeline? leads? The truth is a that ALL of these are indicators of traction but the HOW you pitch it is the important part. All of the markers of traction I listed above are separate so they need to talked about separately. For example, if you have 3 small paying customers, but also had meetings with Google and Facebook, then you shouldn't be throwing all 5 of those logos on your traction slide (especially if those meetings with Google and Facebook didn't go anywhere). Don't conflate meetings, demos, and pilots to customers that are actually paying for your product. If you have 20 logos on your traction slide and only $45K in Annual Recurring Revenue (ARR) investors are definitely going to give you the skeptical side eye and that is not good if you want their money.
The next big mistake I see is that founders don't use traction to help promote their pitch. Pitches are like stories (more on that in a future blog post) and they need to be cohesive. Your market sizing, Go-To-Market Strategy, and traction all need to match. If your market is Mid-sized Tech Companies on the East Coast, then Google and Facebook shouldn't be on your traction slide. Traction needs to continue the story of your pitch and not grind it to a halt with one busy slide full of logos. Instead of treating traction as a box checking exercise, use it to show that you really understand the customer and market that your business is in.
How to Get Head Nods on Your Traction Slide
Traction needs to show up throughout the pitch and not just on one slide. For example, when you present your problem, include the fact that you talked to 100 companies and 80% listed this in their top three pain points. When you bring up your Go-To-Market Strategy, mention how many customers you have demos or pilots with and your conversion rates from lead to demo, demo to pilot, pilot to customer, etc. Now when you finally get your traction slide, investors will believe the story you are telling.
Use the traction slide to highlight one of the indicators above most important to you. Remember don't comingle, paying customers are different from non-paying pilots and recurring revenue is separate from one-time payments. It's ok if you don't have a lot of revenue but it isn't ok to lump everything together and hope your investor is too stupid to ask questions. Spoiler Alert: They aren't. If you don't have one indicator you want to promote, you can show your pipeline. The below illustration is an example of what you can present and add logos to. A slide like this is much more likely to get heads nodding than one littered with random logos.
Summary
Traction is more than just a way to show investors how great you are. It's an opportunity to show investors that you really do understand the market and are going after the right targets. There are many markers of traction so make sure you are clear on which ones you are talking about in your pitch. Lastly, traction needs to be woven throughout the story you tell and not just one slide. This will raise your credibility with investors and make sure you get head nods and not side eyes. If you need help with your traction slide, or any other part of your pitch, reach out to us at InfleXion Point. We are happy to help!
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