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What is a good month over month growth?

Looking for some insights in terms of a month over month growth that is exciting for early stage VCs at Seed stage and also Series A phases. Thanks!

6 Replies

Dimitry Rotstein
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Dimitry Rotstein Entrepreneur
Head of R&D at SafeZone
A figure I hear often is 50% month over month minimum.
Ian Shearer
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Ian Shearer Advisor
Executive Chairman at Parakeetplay
Well. I think it depends upon the base. So if your current monthly revenues are just in the tthousands or maybe tens of thousands then at least 50% per month makes sense but that is clearly not a sustainable rate over time. A better way to look at this is to think in terms of an IRR of at least 40%. That's what VCs seek. If your numbers and exit possibilities don't support that then they won't be interested
Dimitry Rotstein
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Dimitry Rotstein Entrepreneur
Head of R&D at SafeZone
Anyway, if I were an investor, I wouldn't look at any specific number, but at the essence of growth. If growth is exponential (non-decaying growth ratio month over month) and sustainable (no reason to believe that the ratio is going to decay any time soon), then I'd be very interested, no matter what that ratio is. Even if it's relatively small, the exponent will do the same job, just a bit slower, that's all.
Dimitry Rotstein
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Dimitry Rotstein Entrepreneur
Head of R&D at SafeZone
That being said, it's instructive to look at the Inc. 5000 list of the fastest growing companies in US (http://www.inc.com/inc5000/list/2016/).
The average month-over-month growth for the 100 fastest growing companies on this list varies between 20% and 10%, if my math holds.
Now, here we're talking about companies with revenues of at least $2M/year, that have had a sustainable growth for at least 3 years (those are the Inc. conditions).
Obviously, a startup in its early stages is expected to grow MUCH faster than a 3-year old company, so this gives us a lower boundary on what constitutes an impressive growth. In other words, a successful startup is expected to grow by at least tens of percents each month in its early stages, perhaps even by hundreds, but that feels a bit unrealistic. Given all that I think I'll stick with my initial 50% guesstimate.
Hope that helps.
Arthur Lipper
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Arthur Lipper Entrepreneur
Chairman of British Far East Holdings Ltd.
You should review Royalties.Website for a different perspective on fund raising. Arthur
Roy A Ackerman, PhD, EA
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Helping Clients Build Products, Processes, & Profits| Adjunct Chief Financial, Research, or Operations Officers|
The correct month-to-month increase is one that doesn't deplete your cash reserves. If you are bootstrapping- or have a finite capital infusion (don't we all?)- then, you have to make sure that your profit margin and collections yield sufficient cash on hand to fund your next month's needs. If you can keep sucking at the tit of capital (I have never seen such a case), then the growth you can maintain is only limited by your ability to hire qualified folks, acquire the equipment necessary to produce or refine your product.
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