Tag: startup

How to get Traction for your Startup

Traction refers to the initial momentum a startup builds. When you have “traction”, you have a clear indicator that your product or service is viable, you’ve found some level of product/market fit, you’re getting attention from your target audience, and you’re growing your brand.

Metrics such as monthly sales, monthly active users, monthly signups, repeat buys, or a decrease in churn rate or cost of customer acquisition, are all indicators that your startup is gaining traction.

Here is what you need to do:

  • Start with a great product
  • Brand your company
  • Interact with influencers
  • Price your product correctly
  • Market your product using email, social media, google, etc.
  • Leverage partnerships and alliances
  • Track your marketing performance
  • Become a knowledgeable authority in your industry
  • Showcase your product at trade shows and conventions
  • Recruit an A level sales force
  • Invest in your customers’ success
  • Iterate or pivot, and scale your sales

What do Early Stage VCs look for?

What do Early Stage VCs look for?

There are three main things that VCs review in a startup:  team, product and market.  There are seven things that define an excellent founding team:  the intellectual and actual ability to grow the business, intellectual honesty and curiosity, complementary skills and chemistry, a stellar CEO, domain knowledge, relevant experience and defensibility, vision, and product focus.

CEOs need to be masters of execution, able to make tough decisions with poise, and thrive in uncertainty.

What do VCs look for in a startup?

  1. Leadership ability
  2. A strong team
  3. A clean capitalization table
  4. Innovative product
  5. Proof-of-concept or traction
  6. Broad serviceable obtainable market
  7. Customer conversion proof
  8. A reasonable cash burn rate
  9. How the capital will be used
  10. Favorable terms or downside protection
  11. 10 times potential
  12. Investment thesis fit

How to Build a Startup Team


The most important members of your team are the founders. You and your co-founder have to settle on how decisions will be made within the startup. Then you should identify the positions needed to complete your team. Write down the job titles, job requirements, and qualifications and experience required in the incoming team members.

When starting out, you may not have to hire full-time employees. You could have consultants at the beginning and then moving them to full-time employees.  If the founders have a good professional background, it will not be difficult finding good advisors.

Decide what type of work is expected from each team member, who provides backup for whom, how many hours are expected from each person, how flexible the schedule is, milestones each person has to reach, salary requirements or time commitments before quitting, and vacation days.

After the resume review and interview, do some fact-checking and background checks on the potential employees.  Have formal employment contracts signed before they begin work.

Discuss important topics during weekly meetings.  Share learning insights via email or social media.   Have a weekly social activity like going out for drinks.  Have a monthly review defining what the company should start, stop or continue doing, and what the top three priorities are for the next month.

The main goals of a startup team are to get funding, build the product/service, build the business model, define the market, promote the business, get customers, generate revenues, and add more team members.

Pros and Cons of Founding a Startup

Pros:     

  • Leverage of Other People’s Money.  If you choose to raise money for your business, you can fund the start-up or growth with investors’ money instead of your own.  If you are investing in someone else’s private company, then you are the OPM.
  • Leverage of Other People’s Time.  You can leverage your employees’ time for your business.  If you are working in someone else’s business, then you are the OPT.
  • Unlimited payback.  The more successful your company becomes, the higher will be the value of your stock, stock options, bonus and salary.
  • Tax advantages.  Most of the tax law in the United States is geared toward reducing the taxes of business owners.
  • Freedom to express yourself.  You can express who you are and what you stand for through your business.
  • Reputation.  You will be well-known as a startup founder.

Cons:

  • Difficult.  Operating a business is the most difficult of all the asset classes to sustain.  The track record of the management team is very important.
  • High failure rate.  Nine out of ten businesses fail within the first five years.  You may fail at getting the next round of funding or you may fail at exiting successfully.
  • Long hours.  This isn’t a 9-5 job.  You will work nights, weekends and holidays.
  • No guarantee.  There is no guarantee of a steady paycheck.
  • People.  You must deal with and manage employees, clients, consultants, vendors, etc. along with their personalities and moods.  

About the Author

Ms. Hetal Shah was born in 1972. She attained a bachelor’s degree in Civil Engineering in 1993. She has lived in the Boston area for over 27 years. She has worked as a white-collar professional for many years. She is experienced, sophisticated and well-read. She is proficient in strategy, innovation, entrepreneurship, finance and marketing. She is an Indian American lady. She wants to be an Advisor to a couple of startups in the Boston area. She can be reached at hetaliscoy@yahoo.com.