The problem with month-over-month growth rates
Most fundraising decks contain a slide with a chart that looks roughly like this: Chart #1 Or this: Chart #2 I’ve also seen charts that look like this: Chart #3 Or this: Chart #4 Chart #3 and #4 are good for a LOL (or a “WTF!”, depending on your sense of humour), and fortunately we’re not getting too many of these (if you don’t know what I’m talking about, take another look at the charts). A chart that looks similar to #1 or #2 is something we look at on a daily basis, though. What all of these charts and their headlines have in common is that they’re trying to convey exponential growth. Since traction is the #1 factor that determines fundraising success, it’s understandable that founders try hard to show exponential growth (which talking about a m/m growth rate implies). This is especially true if you’re one out of 50 startups that present at a “demo day” and you have three minutes to get investors excited. At some of the demo days that I’ve attended, I felt like this led to an arm’s ...