I think this is a great post. A few months ago, I wrote a post that I think is complimentary. I focused more on figuring out how much to raise, and working backwards from that number. <a href="http://codingvc.com/an-algorithm-for-seed-round-valuations" rel="nofollow">http://codingvc.com/an-algorithm-for-seed-round-valuations</a>
Don't most seed rounds use convertible notes? We use Y Combinator's SAFE Docs (<a href="https://www.ycombinator.com/documents/" rel="nofollow">https://www.ycombinator.com/documents/</a>) so the issue of valuation can be delayed until the company has better metrics and can be value properly, while still giving upside to the note holder.
<i>20% MoM growth is the gold standard - the longer and more consistent you hit high MoM growth, the better. Even a product an investor doesn’t fully understand - for example, an app that self-destructs the photos it shares - starts to look really good with high MoM growth.</i><p>This is part of why I find the (light tech) startup world to be scammy and light on substance. 20% monthly growth is 792% annual growth. Would you really be inclined to put money in a stock fund that said that it was targeting <i>over 700 percent</i> annual growth? Or would you think there was something funny and unsustainable going on?<p>Quality has gone out the window and it's all about blowing up bullshit metrics because that's all these short-attention-span man-child types can deal with. Rather than thinking about <i>what the fuck we're growing</i> it's just growth, growth, growth. Fuck that one-dimensional mindless noise. What are you building? Not all "growth" is desirable.<p>Technology can <i>easily</i> produce 20 to 40 percent annual growth on a large number of economic problems, and even 10-20% once they achieve scale (unlike "viral" phenomena that, unpredictably, phase-change into negative growth). This can be done with a low level of risk. So why isn't there any attention given to companies that, given a couple years of salaries for a few technically competent founders, could reliably and sustainably deliver 20-40% growth over the next couple of decades? Meaningful technological growth rarely comes out of get-big-or-die gambits. The moon landing wasn't powered by a "move fast and break things" attitude. It comes from the humbler 30% annual growth, one year after another after another. Things take time.