Startup Professionals Musings

MAY 14, 2023

Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Cash flow out equates to burn rate, and the runway depends on your reserves.

Burn Rate 258

Burn Rate Hockey Stick Management Salary 258

Both Sides of the Table

FEBRUARY 15, 2016

This has led VC & entrepreneur bloggers alike to similar conclusions: start raising capital early and be careful about having too high of a burn rate because that lessens the amount of runway you have until you need more cash. But the hardest question to actually answer is, “What is the right burn rate for your company?”

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Startup Professionals Musings

MAY 22, 2020

From my perspective as an investor, I recommend that every founder needs to know the answers to these questions, be open and honest in answering them thoughtfully, and without making excuses: What is the current runway and burn rate?

Technical Review 436

Technical Review Due Diligence Sweat Equity Burn Rate 436

Steve Blank

FEBRUARY 11, 2010

Six is a Proxy for Burn Rate. Later I realized six salespeople without revenue to match was a proxy for an out of control burn rate that now had the boards serious attention. Sales’ is on the hook for making the numbers and things aren’t looking good. How many salespeople do you have?” Is there a salesperson in Boston?”

Burn Rate 252

Burn Rate Silicon Valley Marketing Boston 252

Both Sides of the Table

SEPTEMBER 29, 2009

High burn-rates fueled by over investment – One of the most damning things that happened to the start-up markets in 97-00 and 05-08 was the overfunding of technology companies. Bu when you start to worry that the world is ending (as it seemed it was in late 2008 / early 2009) you tend to get worried about large burn rates.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Steve Blank

JULY 30, 2014

Startups operate quickly – at a speed driven by the urgency of a proverbial gun-to-their-head called “burn rate.” their burn rate (the amount of money they’re spending monthly minus any revenue coming in) and. . —– Urgency Drives Innovation Speed.

Customer Development 335

Customer Development Design Developer Customer 335

Steve Blank

SEPTEMBER 5, 2018

These bubble startups were actually guessing at their business model and did premature and aggressive hype and early company launches and had extremely high burn rates – all predicated on an IPO to raise more cash. Startups with huge burn rates – building leases, staff, PR and advertising – ran out of money.

Lean 335

Lean Burn Rate Startup IPO 335

Steve Blank

SEPTEMBER 3, 2014

Speed keeps cash burn rate down while allowing you to converge on a repeatable and scalable business model. The emphasis on the rapid development and iteration of MVP’s is to speed up how fast you can learn ; from customers, partners, network scale, adoption, etc. In a startup building MVP’s is what turns theory into practice.

Cofounder 336

Cofounder Founder Technical Cofounder Coder 336

Both Sides of the Table

NOVEMBER 3, 2009

Too aggressive about the rate of customer adoption? You might then slow down your burn rate or raise more money. Do you need to rethink referral deals or do you need to improve your conversation rates to hit the same revenue numbers. What assumptions proved wrong in the last quarter. Better to model that now.

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

Both Sides of the Table

MAY 28, 2018

Founder: “$8–10 million” VC: “What’s your current burn rate?” VC: “So at a constant rate of burn rate you’d be raising enough for 2.5–3 I built a “plan b,” which in this case just holds burn rate constant at $350k and has you out of cash in month 19, which gives you more runway. Founder: “Um.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me. Stage 2: Deny any of it was your fault.

Redemption 333

Redemption Cofounder Silicon Valley Burn Rate 333

Both Sides of the Table

APRIL 23, 2017

You have cash in the bank, a monthly burn rate and a “cash out” date that few in the company truly comprehend. When you run a startup you’re always on borrowed time. I’ve never met a founder who wasn’t acutely aware of his or her ticking time bomb and the sense that failure and humiliation is a real possibility.

Burn Rate 238

Burn Rate Term Sheet Fractional CTO CTO Hire 238

Startup Professionals Musings

NOVEMBER 7, 2016

Compensation and support carried the corporate burden rate. The burn rate was extremely high, with no one working for equity or deferred compensation. Required pivots and budged changes are painfully slow and over-analyzed.

Technical Review 214

Technical Review Entrepreneur Silicon Valley Burn Rate 214

Steve Blank

FEBRUARY 25, 2010

The next step in the Customer Development process is Customer Validation – making sure that there really is a repeatable and scalable revenue and business model before you turn up your cash burn rate. My version of Customer Validation for an enterprise software company looked liked this: Customer Validation for Web Startups.

Customer Development 274

Customer Development Web Developer Customer 274

YoungUpstarts

AUGUST 31, 2019

Keep Cash Burn Low. Every startup, no matter how small or large, should have a clear understanding of its burn rate. The first step is to calculate your burn rate. The second step is to lower your burn rate and effectively increase the longevity of your startup. Here are some ways you can do this.

Burn Rate 176

Burn Rate Startup Lean Early Stage 176

Startup Professionals Musings

SEPTEMBER 14, 2016

Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Cash flow out equates to burn rate, and the runway depends on your reserves.

Burn Rate 120

Burn Rate Hockey Stick Startup Salary 120

Steve Blank

NOVEMBER 2, 2009

The key contributors to an out-of-control burn rate is 1) hiring a sales force too early, 2) turning on the demand creation activities too early, 3) developing something other than the minimum feature set for first customer ship. And most startup code and features end up on the floor as customers never really wanted them.

Lean 263

Lean Silicon Valley Startup RSS 263

Startup Professionals Musings

FEBRUARY 18, 2023

From my perspective as an investor, I recommend that every founder needs to know the answers to these questions, be open and honest in answering them thoughtfully, and without making excuses: What is the current runway and burn rate?

Sweat Equity 207

Sweat Equity Burn Rate Technical Review Intellectual Property 207

Both Sides of the Table

JUNE 19, 2017

One of the hardest decisions entrepreneurs make when they start a company and raise outside capital is figuring out what an acceptable “burn rate” is. The main reason to know your burn is to arrive at a quick calculation of how many months cash you have before you run out of cash.

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

Startup Professionals Musings

SEPTEMBER 12, 2021

They can iterate and evolve their business idea with a low burn rate and minimal dependencies. Most of these scenarios involve attracting outside investors, strategic partners, or key team members: You are the team and you don’t need outside funding. You’ve built a successful startup before, and plan to use the same investors.

Business Plan 316

Business Plan Technical Review Angel Investor Due Diligence 316

Startup Professionals Musings

JUNE 9, 2012

Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. Then there are computer costs, trade shows, inventory, and a thousand other things. Check industry average statistics to make sure you are in the right range. Cash flow is king.

Forecast 238

Forecast Burn Rate .Net Business Model 238

Startup Professionals Musings

JULY 15, 2013

Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. Then there are computer costs, trade shows, inventory, and a thousand other things. Check industry average statistics to make sure you are in the right range. Cash flow is king.

Forecast 238

Forecast Business Plan Burn Rate .Net 238

Startup Professionals Musings

NOVEMBER 7, 2014

They can iterate and evolve their business idea with a low burn rate and minimal dependencies. Most of these scenarios involve attracting outside investors, strategic partners, or key team members: You are the team and you don’t need outside funding. You’ve built a successful startup before, and plan to use the same investors.

Business Plan 274

Business Plan Technical Review Angel Investor Due Diligence 274

Both Sides of the Table

FEBRUARY 8, 2016

The startup industry may be “resetting,” which doesn’t mean a “crash” but rather just a resetting of valuations, timescales, winners/losers, capital sources and the relative emphasis of growth rates vs. burn rates.

Burn Rate 150

Burn Rate Cap Table Dilution Startup 150

Startup Professionals Musings

JULY 9, 2014

What is the startup cash burn rate per month? Build yourself a list of specific questions, like the following, and get the answers, both informally and formally as you interview and make the rounds: Do you feel strongly about the product or service? How much money has been invested so far? Are more investment rounds required (runway)?

Technical Review 250

Technical Review Stock Options Due Diligence Silicon Valley 250

Startup Professionals Musings

MARCH 22, 2011

Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. Then there are computer costs, trade shows, inventory, and a thousand other things. Check industry average statistics to make sure you are in the right range. Cash flow is king.

Forecast 230

Forecast Burn Rate Startup .Net 230

VC Cafe

JULY 26, 2020

In fact, they were screaming at them to dramatically reduce their burn rates. Angel investment, which was small to start with, disappeared, and most corporate VCs shut down. VC’s were no longer insisting that startups spend faster, and “swing for the fences”. It was a nuclear winter for startup capital.”

Lean 214

Lean Seed Capital Startup Burn Rate 214

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me. Stage 2: Deny any of it was your fault.

Redemption 225

Redemption Cofounder Silicon Valley Burn Rate 225

Both Sides of the Table

OCTOBER 12, 2010

If you can’t figure all of this out then adding a non-founder sales person isn’t going to solve your problems – it’s just going to add to your burn rate. If you don’t have a “base camp&# understanding of these issues you’re not ready to hire a sales person.

Hiring 346

Hiring Sales Startup Early Stage 346

Both Sides of the Table

DECEMBER 16, 2009

I just knew that our sales sucked wind and we were burning through tons of cash. I advocated LOUDLY at the board that we needed to cut our burn rate. We were heading into this most recent recession but it wasn’t fully known yet. We were SMOKING cash.

Entrepreneur 306

Entrepreneur Burn Rate Cofounder Sales 306

Feld Thoughts

NOVEMBER 18, 2013

A review of the cash position, burn rate, and execution plan would have revealed there was not enough cash on hand to nail the pivot while leaving 3-6 months of time in market before raising again. A discussion around overall business viability, time to market, and capital impact would have ensued.

Burn Rate 152

Burn Rate Equity Software Review Early Stage 152

Both Sides of the Table

JULY 13, 2013

And for every time I’ve felt hugely stressed that our burn rate was getting too high, and I didn’t know who else was going to fund the company, and I’m all in on this company, right?” ” And I’m all in on the company, and they’re doing well. By the way, I’ve seen that a lot.

Cofounder 337

Cofounder Technical Cofounder San Diego Startup 337

Steve Blank

APRIL 20, 2009

But in fact, most startups need to keep their burn rate low more [.] Reply DodaPedia » Blog Archive » How to decide where to live , on June 21, 2009 at 7:18 am Said: [.] to do that. You might think you need to be in Silicon Valley since the people there never shut up about their startup culture.

Silicon Valley 302

Silicon Valley RSS San Francisco Technical Review 302

YoungUpstarts

MAY 19, 2016

Use burn rate as an example. If you don’t understand how much money your company is burning through each month, how can you expect to intelligently talk about your fiscal health? To become part of the surviving half, use these methods to ensure your startup’s structure stands strong. Read your books from cover to cover.

Technical Review 124

Technical Review Burn Rate IP Intellectual Property 124

Startup Professionals Musings

APRIL 10, 2016

From my perspective as an investor, I recommend that every founder needs to know the answers to these questions, be open and honest in answering them thoughtfully, and without making excuses: What is the current runway and burn rate?

Sweat Equity 120

Sweat Equity Burn Rate Technical Review Intellectual Property 120

Startup Professionals Musings

APRIL 8, 2015

From my perspective as an investor, I recommend that every founder needs to know the answers to these questions, be open and honest in answering them thoughtfully, and without making excuses: What is the current runway and burn rate?

Technical Review 120

Technical Review Due Diligence Sweat Equity Burn Rate 120

Steve Blank

MARCH 17, 2020

The questions every startup or small business CEO needs to ask now are: What’s my Burn Rate and Runway? Burn Rate and Runway. To answer the first question, take stock of your current gross burn rate i.e. how much cash are you spending each month. What does your new business model look like? How do you know?

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436