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.
Speaking of propellant burn rates, many reloading manuals include a burn rate chart comparing the relative positions of propellants.
According to the research, there is no clear correlation between companies' share price performance and the length of their burn rate.