Minimum traction before approaching investors?


For a company that doesn't monetize yet, how many registered users should it have before starting to approach investors to raise a seed round?

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asked Feb 27 '14 at 23:55
Freddie Henry
95 points
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1 Answer


The answer is 42

Seriously, you need to provide more information about the the type of offering, the intended market (TAM / SAM / SOM) and if there is a monetization strategy (i.e. are you planning on making money and you just haven't gotten traction yet, freemium, etc)

Here's a relevant definition of the terms from a post by a VC - worth the read for some additional ideas.

TAM: Total Available Market. This is the total revenue generated / amount spent (both internally and externally) on a specific segment of the market. This number is typically larger than the simple calculation of ‘total number of customers times Average Selling Price’ because of all the in-house, home grown solutions that get counted.

SAM: Serviceable Available Market. This is the subsegment of the market that a product actually reaches. This is the number that a VC really wants to know.

SOM: Serviceable Obtainable Market. This is the realistic market share that can be obtained by a company given the competition, countries, sales/distribution channels and other market influences. In other words this is the SAM time whatever percent of market share you think you can justify.

answered Feb 28 '14 at 01:24
Jim Galley
9,952 points

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