September 19, 2016
PUBLISHED BY Bryan Stolle
“I know it when I see it,” said Supreme Court Justice Potter Stewart, talking about pornography. Unfortunately, many entrepreneurs get much the same answer from VCs, when asking the question, “what do I need to accomplish or prove, in order for you to fund me?” Despite many VCs’ inability to articulate what a “fundable” business looks like, there actually is some method to the madness. Our Traction Gap framework (http://bit.ly/2ctpG2N) lays out a comprehensive series of milestones and deliverables that, if achieved, should allow an entrepreneur to raise money at a lower cost of capital over time.
In my last blog (http://bit.ly/2ctpG2N), I dug deeper into the attributes of first major milestone — Minimum Viable Repeatability (MVR). “MVR” follows the minimum viable product milestone (MVP), so eloquently described by Steve Blank and Eric Reis. Like the MVP milestone, MVR is usually reached on seed financing, and is when a Series A is often raised.
Minimum Viable Repeatability (MVR) is the minimal amount of progress from the seed round of funding and initial product launch, that is compelling enough for a new investor to come to the table with more capital. There is enough repeatability in core company functions, particularly around customer/user acquisition, that an investor believes the team has the basics figured out, and the future can be roughly extrapolated.
Once MVR is achieved, the next goal is to achieve Minimum Viable Traction (MVT). When MVT has been reached, the business shifts to the scale-up or expansion/growth stage, and Geoffrey Moore’s Crossing the Chasm model becomes front and center. The MVT milestones are similar to achieving MVR, but the expectations and metrics are more advanced and mature. We have identified four areas or “architectures” that matter most in traversing the Traction Gap: Systems, Team, Product and Revenue.
Read the full blog post here.