burn rate

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Burn rate

Used in venture capital financing to refer to the rate at which a startup company expends capital to finance overhead costs prior to the generation of positive cash flow.

Burn Rate

The amount of money that a company spends each month from the amount it has raised from venture capital. For example, if a company is spending $100,000 per month, it is said to have a burn rate of 100,000. The burn rate is measured until the company begins to have a positive cash flow. If the burn rate exceeds expectations or cash flow remains negative for too long, the company may have a difficult time becoming profitable.

burn rate

The speed with which a company consumes cash, generally stated on a monthly basis. A high burn rate indicates a firm will soon be out of business unless it can raise additional capital, dramatically increase cash sales, or reduce expenses. The burn rate was particularly high for dot-com companies that placed emphasis on capturing market share rather than profitability.
References in periodicals archive ?
Because as long as we've got high-ranking government people looking at $700,000-per-day burn rates as "small" and "not a lot of money," we're going to continue having enormous expenditures and low expectations for delivery ('cause hey, we didn't really give them very much money, so we can't really expect them to deliver very much, right?
Because of a $400M Congressional GWOT reduction, the large amount of funding needed to cover burn rate and other must pay GWOT bills, there are limited resources remaining to address your one-time GWOT needs.
Burn Rate includes "bad ideas" cards, forcing players to hire engineers and contractors to correct the problems.
On the whole, the improving burn rates indicate that management teams are focusing not only on cash management, but also on bringing forward their break-even points to take control of their own destinies.
ISS is also fine- tuning previous policies related to majority voting for director elections, stock option burn rates and overboarding on the part of CEO directors.
The FET Researcher uncovered the following resources for information on burn rate.
According to the research, there is no clear correlation between companies' share price performance and the length of their burn rate.
He has built a very talented finance team and we are counting on him to help lead the Company's turnaround efforts which include hitting the 30% net burn rate reduction target set earlier this year," said Tokman.
The WallStreet Research report states, "With no long-term debt and a low burn rate compared to industry standards, especially considering the number of marketed products and significant projects in the pipeline, the Company appears to be an excellent buying opportunity.
The Company's cash burn rate for the first quarter of 2006 was approximately $2 million, slightly lower than the projected burn rate mentioned in BioSante's announcement regarding its 2005 financial results.
Big companies are paying big dollars for big burn rate online concepts.
Dramatically cutting our burn rate will allow us to continue our rapid pace of scientific progress in the xenotransplantation program," said Mr.