Traction?


“You’re too early for me.”

This classic investor line is a staple on the fundraising trail for early-stage startups. It deserves a place alongside “it’s not you, it’s me” on the pantheon of rejection lines. However, it seems like no investor ever has a straight answer for how much traction they really want to see. Instead, you’ll usually get a long, rambling response including the phrases ‘it’s not an exact science’, ‘we know it when we see it’, and ‘product-market fit’.

Who has the real data? According to AngelList, these are the traction numbers you need to hit to raise a $1MM seed round on their platform (Source):

  1. Enterprise: 1000 seats @ $10/seat/month
  2. Big Enterprise: 2 pilot contracts, some revenue
  3. Social: 100,000+ downloads/signups
  4. Marketplace: $50K revenue/month
  5. E-Commerce: $50K revenue/month

Nowhere close to these metrics? There are two directions to go:

  1. Investors will forgive certain entrepreneurs for lack of early traction. These include founders that previously executed successful exits (especially for the investor herself), founders with unique industry-specific experience, and founders they like.
  2. If you don’t fit into one of the categories above, it’s time to seriously consider downgrading to a smaller round led by friends & family or bootstrap the company until its next big milestone.

Many investors wrote off LabDoor immediately. Real science is super expensive, and there’s no obvious business model. We weren’t the hottest company on TechCrunch, and we didn’t have millions of users. But we stayed extremely focused on our strengths – team, product, and story. The best investors pick for extreme positives, not the lack of negatives. Find those people, and do whatever it takes to add them to your round.

And those investors who labeled you “too early”? Remember their names, and don’t be afraid to tell them that they’re too late when they show up at your Series A.