While there are many ways to demonstrate traction, arguably the most robust has to do with your key metric: the ability to engage users at margin (much better than simple "turnover"), i.e:

"The most important thing would be to validate that you are able to capture customers at a cost (acquisition cost or ACC (+) less than the margin you are able to get out of them (life cycle value of the tooth or LTV)".

And why does it matter so much to the investor? Because what you are putting on the table is a "churrera": a predictable system for obtaining income, or in other words, a business in which if you "invest" €10 in attracting customers you get €20 margin.... and although obviously a business model involves many more things, you have shown him that the basis (attraction and monetisation) is validated. But beware, is a factor that should not obsess you in the early days, you are not yet at that stage of your startup. The first few months, or sometimes years, are more about creating a product that your customers love and are willing to pay for than about growing.

HOW CAN WE GET TRACTION FOR YOUR STARTUP?

IN ORDER AND IN MY EXPERIENCE THE BEST AND MOST IMPORTANT WAYS TO DEMONSTRATE TRACTION IS BY USING TRACTION METRICS:

1. Sales/Monetisation: show profitability, turnover...
2. Clients/users: % user growth, new customers...
3. References: top companies/users use your product (pilots...)
4. Customer engagement/retention: your customers love what you do and come back for more.
5. Virality: the product is so great that your own users bring in new users
6. Councillors: you have managed to interest and involve a group of top advisors.
7. Media: your company has achieved repercussion in the media (newspapers, TV, blogs...) or social networks.

Some of the above points may raise some doubts and there is no clear consensus on whether they are traction or not, e.g. media coverage and so on. As you can see, I have placed it in last place because for me they only show social proof, that is, that your product is "newsworthy" and that it has aroused the interest of the media... but for me it is almost worth more highly polarised opinions of users shared on social media (Twitter, Facebook...) than having appeared in a newspaper or blog of reference. But in any case, it is the LAST thing to show.

Vijay, the world's worst venture capitalist

• A: One hundred million people need this kind of service. I have already set up the website and people are signing up.
• B: When we negotiate my equity stake. Focus on my poker face and not my optimistic hair.

If you want to see a complete list, investor Gabriel Weinberg has put together an interesting list of the different ways to get traction.

AND HOW MUCH TRACTION DO YOU NEED?

This is one of the most complicated questions, and the answer will depend on many factors you have to take into account, such as the size of your market, the "momentum" of your startup, the competition... etc. But a good rule of 3 is to be able to demonstrate that your user/customer acquisition strategy is scalable (+), i.e. that you are consistently able to acquire users with margin, and that even as you grow your strategy is sustainable.

BUT AS I SAY IT WILL DEPEND A LOT ON THE TYPE OF BUSINESS YOU HAVE:

• CONSUMER MARKET/B2C (+):

If your business model is aimed at the general public, investors will want to see consistent increases in the rate of new customer acquisition and, above all, in engagement/retention (i.e. that every day more users/customers buy/use your product and that the more they use it, the more they like it). 

• BUSINESS MARKET/B2B (+):

In this type of business model, the key is the relationship between the factors mentioned above, i.e. consistently obtaining customers who leave a margin (LTV) that is clearly higher than the money we have invested in attracting them (CAC), as well as having one or more early adopters (+) relevant stakeholders who have committed to use our product (pilot/test). If I had to summarise all of the above, I would say that the basis is to choose the 2-3 most important metrics for your startup (engagement, recurrence, monetisation...etc.) and demonstrate that they are growing consistently as customers respond to what we do.

SOME OF THE TIPS FOR ENTREPRENEURS TO GET GOOD TRACTION INCLUDE:

• Clearly identify the target audience: it is important for entrepreneurs to know who they are trying to reach with their product or service.
• Use a variety of marketing strategies (+): effective marketing strategies include online advertising, content marketing, influencer marketing, etc.
• Take advantage of the channels (+) existing distribution networks: the social networks (+) and price comparison websites are excellent distribution channels for start-ups.
• Build a strong community around your brand: foster a strong and loyal community around your brand through loyalty programmes and other initiatives.
• Constantly improve your product: Traction is a constantly evolving process, so it is important for entrepreneurs to keep working on improving their product and offering unique value to their target audience.