Rejection, and how you learn from it

Almost every early-stage startup who has approached investors for funding has heard the innocuous-sounding rejection "I love your idea, but come back when you have more traction". What does traction really mean to investors, and how much is enough? Let me try to clarify the rules, and what it takes to win at this game.

First of all, let's start with the definition. Traction is evidence that your product or service has started that hockey-stick adoption rate, which implies a large market, a valid business model, and sustainable growth. Investors want evidence that the dogs are eating the dog food, and your financial projections are not just a dream.

Obviously, this definition is generic, so my first recommendation is that you take the lead in defining traction metrics for your startup, and then selling your results convincingly to investors. A graph that shows a hockey-stick up and to the right curve with at least three data points per key indicator is a...