By Shane Erickson
When we started Traction Capital and launched Fund I, we weren’t just cutting checks. We were trying to prove that smart, values-aligned capital in the hands of gritty Minnesota founders could produce exceptional outcomes. Not just financially, but relationally.
We bet on entrepreneurs in the Upper Midwest, folks who’d proven there was demand for what they were building but needed more than just cash to take the next step. That thesis hasn’t changed. What has changed — and what Fund I taught us — is how to deliver value in a way that’s scalable, sustainable, and founder-first.
Looking back, Fund I gave us more than a portfolio and a couple of great wins. It gave us a framework. A way to work with founders that adds real value without creating dependence. And it confirmed what I’ve always believed: Minnesota is full of talented founders who don’t want handholding, they want a partner who’s walked the path and has their back.
Staying Hands-On at Scale
Early on, I was in the trenches with nearly every company, helping founders troubleshoot operations, shape strategy, and dodge mistakes I made in my own business. But we always knew that wasn’t a long-term model. We needed a way to scale the guidance without diluting the depth.
That’s how the idea of Strategic Growth Partners (SGPs) took shape. We’ve been bringing in seasoned operators — people like Matt Meents — who’ve built and exited businesses and still have the fire to help others do the same. Members of our internal team also help to fill the role of SGP for our portfolio companies. These aren’t advisors who pop in once a year. They’re embedded, available, and outcome-driven, and they show up in ways that founders actually find useful.
One of the best tools we’ve deployed to enable this is EOS. Traction Capital runs on EOS and nearly every single portfolio company does too. It has given us and our founders a common language and more importantly, it has kept everyone focused on the right objectives.
Activating the Network
We’ve always known our investors were a strategic asset, not just for their capital, but for their insight, networks, and operator experience. More than 80% of our investors are entrepreneurs themselves, and the majority are based right here in the Midwest. That shared DNA matters; they understand what it takes to build and scale, and they’re eager to help the next wave of founders succeed.
What changed over the course of Fund I was our ability to tap into that network more intentionally. In the early days, we relied on what we personally knew about an investor to involve them, usually through one or two points of contact. That model was limiting, and we were missing opportunities to leverage the full breadth of expertise across the fund.
Now, we’ve implemented systems and software that give our team and even our founders visibility into who can help where. It’s no longer about who knows whom. It’s about who’s best positioned to add value, and making those connections faster and more thoughtfully. Whether it’s co-investing through an SPV, joining diligence calls, opening doors, or just lending perspective, we’re now involving the right people earlier in the process.
Quality Over Quantity
We’ve never been the “spray and pray” type. Fund I validated our approach of doing fewer deals and going deep. Our hands-on model wouldn’t work any other way and frankly, we don’t want to run a portfolio where we can’t name the founders or articulate their strategic plan.
Focusing on a smaller number of companies has allowed us to truly partner, not just check in. And that depth has consistently helped unlock outsized outcomes, especially as we guide companies toward that $15–50M exit range. It’s not unicorn chasing, it’s about building valuable companies with real optionality, where founders walk away with a win.
Finding Our Sweet Spot
While we’ve remained industry-agnostic, Fund I helped us see where we actually bring the most value. We’ve found real traction in services consulting businesses, e-commerce, and marketplaces, areas where our team and investor base has built, scaled, and exited.
On the flip side, we’ve leaned away from sectors like MedTech and food & beverage. Not because they aren’t important or exciting, but because we don’t have the direct experience that would add value and take them to the next level. We’ll still look at anything with strong fundamentals, but we’re unapologetically leaning into where we have edge.
Fund II: Doubling Down on What Works
Fund I proved that a focused, founder-first model works. Fewer deals, deeper involvement, and a real partnership approach can drive strong outcomes without chasing unicorns. It also helped us sharpen where we add the most value and what it takes to scale that value beyond just one or two individuals.
With Fund II, we’re building on that foundation. We’ve expanded our internal team, brought in more Strategic Growth Partners, and implemented the systems that allow us to support more companies without losing the hands-on approach that sets us apart. We’re backing the same kind of gritty, post-revenue entrepreneurs, but now with more experience, more clarity, and more capacity to help them win.
Fund II isn’t a pivot. It’s a progression, the same core strategy, executed with more precision and greater reach.