Why Traction Metrics Matter for Your Seed Round

You’ve poured your heart and soul into building your startup. You’ve got a compelling vision, a dedicated team, and maybe even some early users buzzing about your product.
But here’s the hard truth: “potential” and “passion” alone won’t secure the capital you need. Seed VCs are looking for tangible proof, a scorecard of your startup’s early performance.

This is Part 1 of our Seed VC Metrics Series, designed to demystify the metrics investors actually care about. We’ll break down the critical validation points that prove you’re not just building something cool, you’re building something with real market demand and engagement.

In this article, we’ll focus on the first two pillars: Traction and Engagement.

Pillar 1: Traction Metrics That Prove Momentum

Traction is the visible evidence that your product is catching on. It’s about showing measurable growth, proof that your early efforts are translating into momentum investors can trust.

Monthly Recurring Revenue (MRR) & Annual Recurring Revenue (ARR) (for SaaS/Subscription Businesses)

  • What VCs Look For: Not just the absolute number, but the growth rate. Seed VCs want to see strong month-over-month (MoM) growth, typically 10–20% or higher for early-stage companies.
  • Why it Matters: MRR is the lifeblood of a SaaS business. Consistent growth proves customers are willing to pay and your sales/marketing motion is working.
  • How to Present: Show a clean trend line over 6–12 months. Use cohort analysis to highlight consistency in new revenue.

New Customers / Users

  • What VCs Look For: Number of new users or paying customers, logos for B2B, individuals for B2C. Growth rate matters more than raw numbers.
  • Why it Matters: Demonstrates demand and validates your acquisition channels.
  • How to Present: Use a cumulative growth chart + a separate chart for monthly additions.

Customer Acquisition Cost (CAC)

  • What VCs Look For: How much it costs to acquire a paying customer. Ideally trending down or well below customer value.
  • Why it Matters: Efficient acquisition is critical to sustainable growth.
  • How to Present: Clearly define CAC calculation (total sales & marketing spend ÷ new customers) and show trends vs. MRR or ACV.

Sales Pipeline (for B2B)

  • What VCs Look For: A robust pipeline of qualified leads and opportunities, strong leading indicator of revenue growth.
  • Why it Matters: Even modest current revenue looks stronger if your pipeline is healthy and repeatable.
  • How to Present: Visualize your funnel stages (Prospecting → Qualified → Proposal → Negotiation → Closed-Won) with deal counts and values.

Pillar 2: Engagement Metrics That Signal Product-Market Fit

Traction gets people in the door. Engagement proves they stay, and love what you’ve built. This pillar shows whether your product is actually resonating with users and creating lasting value.

Daily Active Users (DAU) / Monthly Active Users (MAU)

  • What VCs Look For: Frequency and intensity of product usage. DAU/MAU ratio is a stickiness indicator.
  • Why it Matters: High DAU/MAU means your product is integrated into user routines, a classic sign of PMF.
  • How to Present: Trend charts showing both metrics and the ratio.

Usage Frequency & Time Spent

  • What VCs Look For: How often and how long users engage. High frequency and session time often mean higher value perception.
  • Why it Matters: Strong engagement correlates with lower churn.
  • How to Present: Average sessions per user, time per session, or feature usage heatmaps.

Feature Adoption Rates

  • What VCs Look For: Are users discovering and using the features that drive your core value?
  • Why it Matters: If your key features are underused, you may have a positioning or onboarding gap.
  • How to Present: Track the percentage of active users engaging with 3–5 critical features over time.

NPS (Net Promoter Score) / Customer Satisfaction (CSAT)

  • What VCs Look For: Beyond quantitative metrics, sentiment matters. Happy users become evangelists.
  • Why it Matters: High NPS and CSAT reduce churn and accelerate organic growth.
  • How to Present: Show scores, trends, and include a few customer testimonials.

“Aha!” Moment Clarity

  • What VCs Look For: Can you pinpoint the exact action where users feel the product’s value? How fast do they get there?
  • Why it Matters: Fast time-to-value drives better activation and retention.
  • How to Present: Describe the “aha!” moment (e.g., Dropbox: file syncing) and show the percentage and time it takes users to reach it.

Conclusion

The First Step in Speaking the Language of Seed VCs
Mastering your traction and engagement metrics gives you the language investors actually speak. These numbers show your product is more than a vision — it’s a growing reality with a loyal audience behind it.

But traction and engagement are only the beginning.

In Part 2 of our Seed VC Metrics series, we’ll tackle Retention and Unit Economics — the proof that your growth is sustainable and your model is built to scale.

Author: Laura Lirette