seed round parameters?

How should we decide how much we need to raise in a seed round?

Our biggest expense is salary for the founders -- just enough so we can work full time on the company without living in our cars or eating dirt. Expenses like marketing and equipment are relatively minor.

How many months of runway should we be aiming for?

Are there other significant parameters that come into play?

What percentage of the company should be expect to sell? (We expect to have a couple of "friendly" customers / paid beta along with a functional demo/prototype when we start fundraising in earnest.)

How should we decide how much we need to raise in a seed round?

Unless you are super-sexy startup, the investor will decide how much money they want to put in. So don't dream to much, just go and talk to potential seed investors.

Our biggest expense is salary for the founders -- just enough so we can work full time on
the company without living in our cars or eating dirt. Expenses like marketing and
equipment are relatively minor.

think about doing consulting for 50% of your time, leave other 50% to work on your startup. This model is often the fastest way while in seed stage.

How many months of runway should we be aiming for?

ideally 12-18months. But, again, it is your seed investor who will probably set the rules of the round.

Are there other significant parameters that come into play?

sure: its your idea, your stage of development, your team, your market, ...

The answer to most of your questions depends on alot of factors, all the way from how cool the industry you are looking at, where you are located (and how many angels are around), how much money you would need to raise in the long run to how much money you need to raise in the short run.

You need to dig deep and figure out how much of a rush you are in. If you have time on your side, you can bootstrap all the way by using consulting - which is often recommended for first time entrepreneurs.

Before having serious revenue, expect that the higher limit on your pre-money valuation to be $5 million. And for investors to feel like they are getting a good deal (and investing in you) they need to be getting atleast 5% (likely 10%-25%) and be hoping to get a 10x on the money that they are putting in.

There is a very good answer here: http://www.techcrunch.com/2009/10/08/startups-101-the-complete-mint-presentation/