Raise on traction or vision, but never both.
In a brief interaction with Christina Cacioppo of Vanta, she shared this nugget with me.
VCs want to invest in businesses that can be MASSIVE. Your job as a founder is to prove that you're building something that can reach that scale.
If you're early-stage, you might be able to prove it with your traction, but it's unlikely.
For Chezie, raising on traction was leading with something like this:
"We've grown to $100k ARR in 6 months with 5 enterprise customers."
We thought that this traction would be more than enough for VCs to invest, but there was one problem:
We couldn't tell how this grows to $100M in ARR.
Sure, $100k is impressive.
But VCs don't invest for $100k. Or $1M. Or even $10M.
Every VC must believe that what you're building can grow to $100M ARR.
If they don't believe that, there's nothing you can say to get their buy-in. It doesn't matter how much traction you have, how great your product is, or how impressive your team is.
It's $100M or pass.
So, after 25-ish meetings, we pivoted to raising on vision:
"We want to help enterprises connect their most under-utilized asset (employee resource groups) to their business goals, like building a product or generating sales.”
Boom.
That's a vision-first story that a venture capitalist can get excited about.
And it worked.
When we switched from pitching traction to pitching vision, our meetings changed completely. Investors leaned in, and the right questions were asked.
And finally, the checks ($800k worth) started coming in.
Traction sells the present, but vision sells the future. And VCs are in the business of betting on futures.
So, if you're a first-time founder struggling to raise money, ask yourself this: Am I trying to sell both traction and vision?
Choose one lane (probably your vision) and go all in.
Your bank account will thank you.
What’s the best fundraising advice you ever got? Share in the comments 👇🏾
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