Recently I met with an entrepreneur that’s working on a new marketplace idea. We talked for a bit and I challenged some of his assumptions and gave anecdotes from other industries. Then, when it came to the “ask” about investing, I explained that raising money simply on an idea with no traction is nearly impossible. The best thing to do: figure out how to get the app built and customers loving it.
Here are a few thoughts on traction required for investment:
- Use a service like Upwork and have a simple app built
- Once built, sign up customers to prove the value
- Figure out the necessary amount of traction to be desireable (categories of initial traction for five types of startups)
- Build relationships with investors in parallel (see Invest in Lines, not Dots)
- Know that most startups don’t raise any money
Traction is a critical element for raising money, and entrepreneurs would do well to focus on getting the product right and customers on it first.
What else? What are some more thoughts on traction being required to raise money?