If you’re a founder looking for investment, you may get questions about your product’s traction – in other words, what indicators prove that your product is reaching users and can reach even more? Of course, at the very early stages, you might not have a lot of traction. You might not even be fully launched or fully built. That’s why you came asking for investment money, after all!

So, what are pre-seed investors really evaluating?

During Hustle Fund Co-Founder Eric Bahn’s talk with the Founder Institute, he said that he evaluates traction forgivingly with pre-seed companies. Sure, a case study or pilot launch data is useful. But even without that, he stressed the importance of having a thesis for gaining traction in the future.

In other words, you need to demonstrate that you know the difference between having a project, and having a business.  

A project is not a business, unless…

A project is something that you build. It might be cool, interesting, or even revolutionary, but it doesn’t inherently make money. A project becomes a business by making money. Specifically, by making more money than it spends. More money comes in than goes out. It becomes sustainable. There’s even a fancy accounting term for this: a going concern.

Seems obvious, but many founders get so obsessed with product vision that they neglect the other half of the equation: how they will get that product to generate revenue. That’s where Eric’s focus on thesis comes in. This is your plan for traction, for growth. This is your argument for why your project is actually going to become a business.

This thesis is often referred to as a go-to-market or GTM plan.

How specific is your GTM plan?

Your GTM plan is how you demonstrate your logic: How will your product acquire and retain users? Eric stressed that too often founders don’t get explicit about how they will ensure the company achieves more money in than out over time. Not enough concern for a going concern, if you will.

In other words, your GTM plan can’t be a hand-wavy Oh, our product will be so good it will just grow virally. You need to get into specifics to show you understand the market and the channels for reaching users.

It has to be more like this:

“As a B2B company, we will build out a sales team to reach mid-size companies in our targeted sector.” Or: “We will pursue strategic partnerships with Fortune 100 companies in order to gain further distribution for our product.” See how these get more specific? They show an understanding of what it takes to get traction, and an understanding of just who your product is for.

Your GTM plan is a thesis for how you will take your company from project to business. The evidence might not be there yet, but you are arguing that you will achieve a going concern in the long term.