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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Assuming work is performed every day of the year, we calculated a burn rate over $800,000 per day ($600 million divided by 730 days equals $822,000 per day).
One aspect of powder design important for the Finns is stability of burn rate over large temperature variances.
Given bondholders' novel strategy to press companies for immediate payment under the theory the customer is in the "zone of insolvency," what are the additional credit risks, both direct and indirect, for a credit executive in assessing an existing customer's credit line and new open account sales in the telecom industry, including the use of cash burn rates?
In its rolling quarterly analysis of cash burn rates and share price performance of the top 150 publicly-listed European Internet companies, PwC said the worldwide economic slowdown has wiped out signs of recovery in the sector.
A recent survey carried out by PricewaterhouseCoopers has shown an increase in profitability and a stabilisation of cash burn rates amongst European Internet companies.
The fuels with higher heats of combustion will give greater reactivity and faster burn rates. One of the common compositions used for delays ranging from 25 to 1000 ms is the mixture of silicon and red lead.
Meanwhile, the companies, now up and running, needed huge infusions of new capital to cover what in many cases had become alarming "burn rates"-the amount of money consumed by start-ups before they're self-sustaining.
Inhibitors, dynamic burn rates and surface area changes are all at play each time a cartridge is ignited.