Traction is an elusive term thrown around by every Venture Capital firm when discussing interesting ventures to invest in. As an entrepreneur looking for funds, finding investors is really about understanding which investors you should be talking to and what you need to have to show them. Using lean startup principles build out your idea with more efficiency, less waste and better results. Understand what investors want to invest in, and prioritize your efforts.

1. MILESTONES FOR
FUNDING NEW VENTURES
FOUR TRACTION POINTS
THAT INTEREST INVESTORS
1

2. 2
Four Traction points
1. Idea/Technology Development
2. Product/Market Validation
3. Business Model/ Early Growth
4. Rapid Growth
https://www.forentrepreneurs.com/saastr-2018/

3. 3
The Startup Journey
http://disciplinedentrepreneurship.com/
* Bill Aulet’s Book: Disciplined Entrepre
integrated, comprehensive and proven
for developing the product to launch a
While each new startup is unique in m
process for starting them can be accel
this rigorous framework that also allow
individuality and variability in the outc
What it is really like

4. • A Startup is a temporary organization
designed to search
for a repeatable and scalable
business model
https://steveblank.com/2010/01/25/whats-a-startup-first-principles/

5. Investment Readiness Level
Mkt Size/Competitive analysis
Complete first-pass canvas
Problem/Solution Validation
Low Fidelity MVP Experiments
Validate Product/Market fit
Validate right side of canvas
Prototype High-Fidelity MVP
Validate left-side of canvas
Validate metrics that matter
Friends and Family
Angel investors
Venture Capital
None

6. $1B+ Market?
Scalable Solution?
Recurring Revenue?
Past Successes?
Full team? (Hipster, Hacker, Hustle
Traction?
Investment Interest Level

7. DREW HOUSTON, CEO DROPBOX

8. • How do I get funding at this stage?
• Do it yourself (and learn.)
1. DEVELOPING YOUR IDEA
SWEAT EQUITY

9. https://strategyzer.com/canvas/business-m
1. DEVELOPING YOUR IDEA

10. • Nothing beats a good conversation.
1. DEVELOPING YOUR IDEA
GET OUT OF THE BUILDING
TALK TO POTENTIAL CUSTOMERS
Look For
Pupil Dilatio

11. • Lean Startup Principle:
• Examples: Lean Startup Challenges, Startup Weekends, Launchrock, Mock ups, WIX, Code
Training, Hackathons, etc.
1. Developing your idea
USE FREE/CHEAP RESOURCES AND TEST

12. • Goal:
1. Developing your idea
VALIDATE ASSUMPTIONS -FIND
POTENTIAL CUSTOMERS
https://www.udacity.com/course/how-to-build-a-startup--ep245

13. 1. Developing your IDEA
What does traction look like?
Examples:
• 100 – 1000 possible users/emails,
• 10-15 potential customers,
• 2-3 letters of intent,
• 1 enterprise client MOU/LOI
COMMITMENTS

14. • How do I fund my prototype?
• Get creative. Leverage your network. Reach out to friends, family, SBIR/ STTR, customers,
Kickstarter, Indiegogo, and similar sources.
• Tell your story. Make a little go a long way.
2. CREATING YOUR PRODUCT
ASK THOSE YOU KNOW

15. • Essentials Actions:
2. Creating your product
BUILD A TEAM
Include a hipster, a hacker and a
hustler;
In other words, every good team
needs a designer, a developer and
a business person.
https://www.forbes.com/sites/andyellwood/2012/08/22/the-dream-team-hipster-hacker-and-hustler/#5f7d6b182c85

16. • Lean Startup Principle:
• Build an MVP of MVP
(Minimum Viable Product of
Most Valuable Piece)
• Use API’s and other existing
resources when possible
2. Creating your product
VALIDATED
LEARNING
More: https://www.slideshare.net/KellySchwedland/lean-startup-basics-evidence-based-entrepreneurship

17. • GOAL:
• Paying customers
• Product usage
2. Creating your product
VALIDATE PRODUCT
“REAL CUSTOMERS”

18. • What does traction look like?
• Examples:
• 10,000 downloads,
• 1000 daily active users,
• 100+ paying customers,
• 1 paying enterprise client with 100+ seats ($3K - $5K/month), etc.
2. Creating your product
PROOF OF VALUE
TO CUSTOMERS

19. • How do I fund this thing?
ANGELS
Prepare your 10 point pitch and
share your traction with angel
investors, networks, funds,
Angel.co, etc.
https://www.slideshare.net/KellySchwedland/a-guide-to-indepth-investor-pitches-by-elevate-ventur
3. PERFECTING YOUR BUSINESS MODEL

20. You Need to Get Here!
Product/Market Fit:
LTV/3 >= CAC
You Are Here
You’ve only just begun
*Ideally CAC< A
3. Perfecting your business model

21. • Essentials Actions:
• Acquisition Activation Retention Referral Revenue.
3. Perfecting your business model
CONVERSION METRICS
Stage Conversion Status Conv.
%
Est. Value
(*not* cost)
Acquisition Visitors -> Site/Widget/Landing Page
(2+ pages, 10+ sec, 1+ clicks = don’t abandon)
60% $.05
Activation “Happy” 1st Visit; Usage/Signup
(clicks/time/pages, email/profile reg, feature usage)
15% $.25
Retention Users Come Back; Multiple Visits
(1-3x visits/mo; email/feed open rate / CTR)
5% $1
Referral Users Refer Others
(cust sat >=8; viral K factor > 1; )
1% $5
Revenue Users Pay / Generate $$$
(first txn, break-even, target profitability)
2% $50

22. • Lean Startup Principle:
• Measure progress and prioritize work.
• Innovation Accounting is a way of
evaluating progress when all the metrics
typically used in an established company
(revenue, customers, ROI, market share)
are effectively zero.
3. Perfecting your business model
INNOVATION ACCOUNTING
https://www.ideou.com/blogs/inspiration/innovation-accounting-what-it-is-and-how-to-get-started

23. • GOAL:
• This equals
successful monetization
3. Perfecting your business model
EPEATABLE / SCALABLE BUSINESS MODE
https://www.slideshare.net/KellySchwedland/building-the-billion-dollar-saas-unicorn-for-2018

24. • What does traction look like?
• *cost of acquisition is less than 1/3rd lifetime value; $1 in, $3+ out
• Enterprise: 1000 seats @ $10/seat/mo.,
• Big Enterprise: 2 pilot contracts and some $
• Social: 100,000 downloads/signups
• Marketplace: $50,000 revenue/mo.
• E-Commerce: $50,000 revenue/mo.
3. Perfecting your business model
CAC < LTV/3

25. • How do I fund this thing?
4. Growth
CASHFLOW? OR
VENTURE CAPITAL?
Meet with a dozen venture capital firms to find
fit and funding for growth.

26. • Essentials actions:
• Execution to metrics, revenue, profits,
team growth, key frustration
process improvement and
acquire niche companies.
4. Growth
CONSISTENT GROWTH

27. • Lean Startup principle:
• Build, Measure and Learn
• Product Features
• Distribution Channels
• Verticals
4. Growth
BML

28. • GOAL:
• What does the door look like:
• Buyout or IPO?
4. Growth
INVESTOR EXIT

29. • What does traction look like?
• Consistently driving customer acquisition
and revenue as expected.
• Finding new avenues for revenue growth.
4. Growth
ONGOING ROLLOUT
https://www.linkedin.com/pulse/saas-adventure-triple-double-1b-neeraj-agrawal/

30. • Next steps:
• Meet with investment bankers
• M&A specialists
• Private Equity groups
4. Growth
PREPARE TO PITCH

31. 31
Have questions?
See something I missed?
Let me know.
Kelly Schwedland
219-405-5723
Kellys@elevateventures.com
Find More:
https://www.slideshare.net/KellySchwedland/
ElevateVentures.com