For a Startup, how important is traction for raising funds?

Traction is not a necessary condition, and certainly not a sufficient condition for investors to get excited about your venture.

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The factors that investors will consider, are as follows:

  1. Is the market large enough?
  2. Does your product/concept have a reasonable chance of being a dominant player in that market?
  3. Is the team committed and competent to execute this?

In all the above, if there is a negative on point No.3, then point 1 and  2 become irrelevant.

If you already have traction, all it does is improve the chances of getting funded because traction means that some of the assumptions for that business are proven in the marketplace.

But traction by itself does not mean anything unless supported by the 3 points mentioned above.

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Author: Prajakt Raut

Prajakt Raut is the founder of Applyifi.com, and author of the book for startups - ‘Starting Up & Fund Raising’ Prajakt personal goal in life is to encourage and assist a 100,000 people to become entrepreneurs. _____________ Prajakt is the founder of Applyifi - an online platform that provides startups a 36-point scorecard and assessment report on the venture's investment readiness [www.applyifi.com], and helps them improve their odds of getting funded. Prajakt is also the founding partner of The Growth Labs, a platform where growth-stage companies get sharp, incisive advice from senior professionals and experienced entrepreneurs. [www.thegrowthlabs.in] Before starting Applyifi, Prajakt was the head of operations at IAN, founding member of a leading incubator, and the Asia-Director for TiE (2004 - 2007). Previously Prajakt had co-founded Orange Cross, a healthcare services company, and was part of the founding team member of Idealake Technologies. While in college Prajakt had founded a printing business and has spent over 10 years working in leading advertising agencies. Prajakt’s book, ‘Starting Up & Fund Raising’, helps startups understand an investor’s perspective, and helps them improve their odds of getting funded. The book also helps entrepreneurs understand the building blocks of a business.

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