How to show traction in a pitch deck?
What is the best way to show traction in a pitch deck when out there fundraising for your startup? Traction is a big part of the decision for investors. It is one of the most pivotal factors in running a successful startup.
So, how do you show how well you are doing? What counts as traction? How do you accelerate yours if you need to crank things up ahead of a new fundraising round?
Top Factors For Getting Funded As A Startup
Getting funded is much less about having a unique business idea as it is having a great foundation for a highly valuable, fast-growing business, and proof that you are able to make things happen.
When it comes to presenting your pitch deck, these are the most important factors that investors will be looking at.
The Problem You Are Tackling
If you aren’t tackling an urgent enough and big enough problem, and have great clarity on it, you won’t have a strong basis for a company that can deliver what investors want and need. Your product and solution come a distant second to the problem. As long as you have the problem right, you can keep tweaking until you get the product right.
The Right Team
You can have everything else right, but not have the right team. That will kill you. It doesn’t matter if you have a great problem and product idea if your team can’t excel at executing and stay ahead of the pack. Investors want to back the best team in your space. When figuring out how to show traction in a pitch deck, the team should be high on your list of priorities.
If you’re looking for more detailed information on how to create a pitch deck, take a look at this video I have put together.
Ability To Focus
99% of startup ideas never get off the ground because would-be entrepreneurs just can’t focus enough to take action and keep things moving. They get lost in creating lengthy business plans and pitch decks and watch the opportunities sail by as others who can focus get the funding and claim the customers. Traction is a side effect of focus. Investors also want to know you are focused on gaining traction, because that’s what is going to make them money.
The numbers have to work too. Especially in the wake of recent crises, investors are looking for solid financial fundamentals.Think revenues, gross profit margins, net income, and exit multiples.
What Is Traction?
Traction is all about growth and making progress.
There are different types of traction you may want to show in your pitch deck depending on your stage in business. It’s what you want to be clear about when working out how to show traction in a pitch deck?
- Sales volume in units
- Customer acquisition
- Team size
- Revenue per employee
Why Traction Is So Important
Traction means growth. Growth means increasing value and returns for investors, and that an exit and liquidity event is more likely.
The opposite is also true. A business that is stagnant or shrinking is losing value and if an exit is possible, it will probably come at a loss.
Traction shows that you are getting things right. Your marketing, the product, and the operations. It is proof that you can execute and make things happen. It also shows how fast you are capable of growing, enabling investors to better assess value and their returns on investment.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
How Would You Show Traction In A Pitch Deck
Pick just one metric to demonstrate your traction in your pitch deck.
Make sure you choose one that you can continue to focus on daily and keep showing growth in as you approach another round of fundraising. You have to be able to deliver on it if you expect your investors to participate again and recommend you to other investors.
The traction slide in your pitch deck just needs a graph. Show how much this data point has been growing over time.
Then include it in your forecasts as well.
How Much Traction Do You Need To Show?
How much is enough?
Investors are going to have different expectations at different stages of business and fundraising. Some will want real revenues. Others just want to see that you are growing and adding users.
The earlier the stage the higher the expectations of growth rate are. As a business becomes large and mature, growth rate inevitably slows. If you are attempting to get into a competitive startup accelerator you may need to show traction of 10% week over week. Many startups are able to grow at 50% to 70% per year. 100% isn’t uncommon.
Tips For Boosting Traction Before Fundraising Rounds
- Join an incubator or accelerator
- Get scrappier with your marketing
- Be making regular PR pushes
- Publish more articles, blogs, and podcasts
- Be sure your team is focused on this metric
- Create distribution and sales partnerships
Q&A: What Investors Will Want To Know About Your Traction
Here are some of the questions you will get from investors on your traction. Be prepared with responses when learning how to show traction in a pitch deck?
- What profit margins are you able to maintain on this traction?
- What are your projections for continued growth?
- How long are you retaining customers?
- What percentage of sales are resulting in refunds?
- What are your customer acquisition costs?
- The distribution between current, recurring, and new customers?
Tractions is one of the most important elements when it comes to startup fundraising. It’s important for the survival of your own business. As well as being one of the best predictors of success and investment returns for investors. Know how to show it, keep your traction levels high, and how to follow through well when it gets to the Q&A section of your pitch.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.