Cash is the fuel of every startup. Your burn rate is the rate at which that money is being spent, and allows an estimate of how long you can go before refueling (runway). That refueling is when you will need more investment, or when you will break even and begin that steep profitable growth curve.
Investors look at your burn rate to see how efficient and effective you are at running the business. It continually amazes me how two startups, seemingly comparable in stage and objective, can be so far apart in their burn rate. One can build a new website application for $10,000 per month, while another is burning $50,000 per month. Which would you bet on?
To read the full, original article click on this link: Startup Professionals Musings: High Burn Rates Result in Short Startup Runways
Author: Martin Zwilling
