Gaining Startup Traction on a Budget

You don't always need to invest a lot of capital to demonstrate traction to investors. Here is how to do it on a budget and with limited resources.

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By Kirsten Green


Opinions expressed by Entrepreneur contributors are their own.

Q: When an entrepreneur has a small team and very little resources, how does he show effective traction?
-Parth Mishra

A: First off, good to see that you are thinking along the lines of demonstrating some traction. There is real value in adopting this approach vs. simply showing up with an idea (even if it's well researched) drafted on a paper. Investors value being able to see some proof of concept and traction before committing funding -- even in the early days. They respect founders that are resourceful and able show this with little resources, as it helps demonstrate your scrappiness as a team.

Here are three ways to validate your business idea using little resources:

Demonstrate your use case with customer research. At Forerunner, we are big believers in prioritizing the end user and focusing on the experience you are delivering. Detailed consumer research and focus group learnings go a long way with us. Prototyping your product or service and soliciting feedback on experience, position and price-value perception can be indicative of how your product might be embraced and help validate early product-market fit.

Depending on what your company will sell, serve and deliver, it might be feasible to build up some online social presence and start to show a base of enthusiasm for your offering. This can be done without financial commitment by utilizing Twitter, Facebook, Instagram and Vine, among other social networks. You may also turn to Kickstarter to help determine your core target demographic and garner feedback.

If we're talking about an enterprise-focused offering, hopefully there is potential to tangibly identify your core audience and obtain direct feedback from an assortment of end-user companies that stand to become early beta testers.

Related: How to Find Beta Testers

Being able to interpret customer feedback and incorporate that into your market strategy is also a meaningful way to demonstrate internal team traction. It shows an active level of commitment to feedback and provides some insight into your teams' ability to iterate based on learnings.

Develop a prototype product. Prototyping, in general, is important and doesn't need to require meaningful resources. Most investors appreciate detailed market analysis and business model consideration with some investors being visual, while others are tactile.

Showing investors what you'll be selling or offering is a good way to understand if there is upfront agreement on the initial direction and product priorities. Without some clear idea of what the product will look like or will be, it's hard to know if we are on the same page. If your product is web or app based, you ideally have a minimum viable product site up. If not that, at least wire frames and a development plan in place. Having your development and/or supply chain partners identified and vetted can also lend credibility toward your product, as well as your development and launch schedule.

Related: 3 Steps to Transform Your Business Idea Into a Prototype

Identify hiring plan and potential members. If you are not in a position to make hiring commitments, you can help show market interest by having a selection of likely candidates identified that have indicated a level of interest in joining once funding is secured and/or specific milestones are met.

In my experience the most successful companies have founders that inspire interest both externally, as well as internally. It's teams and empowerment of people that turn ideas into action. The more confidence that can be built that qualified people will want to be part of what you're building, the more compelling your prospects will be.

Kirsten Green

Kirsten Green is the founder of San Francisco-based VC firm Forerunner Ventures. Green has raised more than $100 million from leading institutional investors and invested in more than 30 early-stage companies. 

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