TLDR:
- Founders often complain that Australian VCs require traction before investing
- VCs may give feedback that is not completely honest to avoid upsetting founders
In a recent article, Casey Flint, a senior associate at Square Peg Capital, explains the difference between what VCs say and what they actually mean when talking about traction. While founders often complain that Australian VCs are too conservative and require traction before investing, Flint suggests that VCs may not always be completely honest in their feedback to avoid upsetting founders and protect their reputation.
Flint provides an example of how VCs may ask for traction as a form of feedback that is not too blunt. For instance, if a founder pitches a software tool targeted at schools but fails to impress the VC with their go-to-market strategy, the VC may ask for traction as a way to see proof that their belief about the founder’s ability to sell is incorrect.
Flint also shares three other types of traction-based feedback that VCs may give, including wanting more traction than is appropriate for the stage of the startup, being excited by the founder but anxious about go-to-market in a specific market, and considering the traction to be too slow for the stage of the startup.
Overall, Flint’s insights provide founders with a better understanding of how VCs think and the importance of narrative and traction in pitching to investors.
