Traction Slides Without Revenue: How to Create an Effective Presentation

As an entrepreneur or investor, you’ve probably encountered the term "traction" when evaluating startups. But what does it mean to show traction, and how can early-stage companies demonstrate proof of concept without revenue?

Table of Contents

What is Traction?

Traction represents evidence that a company’s chances of success are increasing, while the risk inherent in the business is decreasing. In other words, traction proves that what you’re doing is working.

To understand traction, let’s break down the process of building a startup into stages. Each stage involves de-risking the business by removing assumptions and mitigating potential pitfalls.

The Stages of Building a Startup

Ideation: You start with an idea, but it’s just that – an idea. At this stage, you have almost infinite risk.
Assumption-making: As you begin to build your company, you make assumptions about the market, technology, sales, and regulatory environments. Each assumption represents a potential risk.
De-risking: You take on each risk one by one, proving or disproving your assumptions.

The Importance of Assumptions

Founders often overlook the importance of assumptions in their business plan. Every assumption you make represents risk: "I’m assuming that mobile phones will have 3.5 mm audio jacks for the foreseeable future," or "I’ll be able to find my potential customers and persuade them to buy." If these assumptions turn out to be incorrect, your entire business model may collapse.

Proving Assumptions through Traction

Traction is anything you can do to prove that your highest-risk assumptions are correct. It’s not just about revenue growth; it’s about demonstrating that your company is moving in the right direction.

Here are some ways to generate traction with little to no money:

Technical challenges: Overcome technical hurdles by building prototypes.
Regulatory risks: Mitigate regulatory approval risks before launching your product by finding similar products and working with regulation experts.
Concierge MVPs: Build a minimal viable product (MVP) that proves your concept without requiring large investments.

Investor Concerns

To understand what investors are most concerned about, talk to them and pay attention to the questions they ask. Addressing their concerns through traction is essential for securing funding.

While exponential user and revenue growth is ideal, demonstrating a clear understanding of risks and actively working to design them out of your business model is far better than simply presenting a list of achievements without context.

Conclusion

Traction is not just about showing impressive numbers; it’s about proving that your company is on the right path. By de-risking your business through assumption-making, demonstrating traction, and understanding investor concerns, you can build a successful startup that attracts funding and grows into a thriving enterprise.

About the Author

Haje Jan Kamps is a seasoned entrepreneur, investor, and journalist with experience in hardware, software, and photography. He has founded several companies and written a book on pitching startups to investors.