What is Market Traction?

Traction, also referred to as market traction or business traction, refers to evidence showing a product or service is being accepted and used by the market. In essence, traction refers to the gap between merely having an idea and having proof that the market wants the idea. Traction is what makes investors, partners, and employees interested in your business.

Importance of Market Traction

Market traction helps prove that a venture is not just an idea, but is being accepted by the world. An enterprise may possess something innovative, but customer demand and business growth are greater proof of the venture’s commercial viability.

Market traction could help a business:

• Show product-market fit
• Attract investments
• Gain credibility among customers and partners
• Find out which channels are working for selling and marketing the products/services
• Measure growth
• Make more strategic decisions regarding future expansion
• Know if the products or services offered are fulfilling customers’ requirements

Why Do Investors Place Such High Value on Business Traction?

• Traction decreases risk. Traction is proof that there is demand for the product, minimizing the need to rely on founders’ salesmanship alone.
• It’s a measure of execution capability. Being able to create traction involves being able to overcome multiple challenges in distribution, product, and customers all at once; thus, investors interpret traction as an indication that the team can execute.
• It sets the terms for the next funding round. Traction allows founders to negotiate better terms when raising more money.

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