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

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? Look for examples of similar companies and revenue multiples achieved from acquirers.

Technical Review 436

Technical Review Due Diligence Sweat Equity Burn Rate 436

Both Sides of the Table

NOVEMBER 3, 2009

Let’s take your revenue line. If you’re a consumer destination the revenue and COGS lines should tell me about how big your funnel is, how you fill the top end of the pipe and what your conversion rates will be. Don’t know the running rate for engineers? Or lower revenue assumptions.

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

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

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. These “friends and family orders” made the first nine months of their revenue plan. How many salespeople do you have?”

Burn Rate 252

Burn Rate Silicon Valley Marketing Boston 252

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. the day they run out of money and have to shut the doors (or get a new round of funding.).

Customer Development 335

Customer Development Design Developer Customer 335

Steve Blank

SEPTEMBER 5, 2018

Tech IPO prices exploded and subsequent trading prices rose to dizzying heights as the stock prices became disconnected from the traditional metrics of revenue and profits. Startups with huge burn rates – building leases, staff, PR and advertising – ran out of money. Some have labeled this period as irrational exuberance.

Lean 335

Lean Burn Rate Startup IPO 335

Both Sides of the Table

SEPTEMBER 29, 2009

Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. 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. I argued for literally a year to slash burn.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Steve Blank

NOVEMBER 2, 2009

And I can even imagine cases where it might burn more cash than a traditional startup. 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. Lets see why.

Lean 263

Lean Silicon Valley Startup RSS 263

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 If you’ve raised $3 million previously, have $250k in monthly recurring revenue and 23 staff an $8–10 million round might be more down the fairway. Founder: “Um.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

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. In enterprises, performance objectives are usually tied to internal processes, rather than beating competitors, customer acquisition, and revenue growth.

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.

Customer Development 274

Customer Development Web Developer Customer 274

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? Look for examples of similar companies and revenue multiples achieved from acquirers.

Sweat Equity 207

Sweat Equity Burn Rate Technical Review Intellectual Property 207

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

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. The holy grail is break-even, when revenues first catch up with the outflow. Then there are computer costs, trade shows, inventory, and a thousand other things. Cash flow is king. Financial projections can be intimidating.

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. The holy grail is break-even, when revenues first catch up with the outflow. Then there are computer costs, trade shows, inventory, and a thousand other things. Cash flow is king. Financial projections can be intimidating.

Forecast 238

Forecast Business Plan Burn Rate .Net 238

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. The holy grail is break-even, when revenues first catch up with the outflow. Then there are computer costs, trade shows, inventory, and a thousand other things. Cash flow is king. Financial projections can be intimidating.

Forecast 230

Forecast Burn Rate Startup .Net 230

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. Gross burn is your cost base and net burn is the difference between your revenue and costs. In short, it’s the amount of cash you’re burning every month (vs.

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

VC Cafe

JULY 26, 2020

In fact, they were screaming at them to dramatically reduce their burn rates. In a capital scarce environment following the Dot Com crash, startups needed to do more with less and survive long enough to generate revenue. It was a nuclear winter for startup capital.” ” Steve Blank, “Is the lean startup dead?”

Lean 214

Lean Seed Capital Startup Burn Rate 214

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. If the tool doesn’t grow his revenue then how is he going to cover the additional costs – especially in this market?&#. We were SMOKING cash.

Entrepreneur 306

Entrepreneur Burn Rate Cofounder Sales 306

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

Steve Blank

SEPTEMBER 7, 2009

Instead of a Sales team and organized to sell with a consistent and successful sales roadmap generating revenue, it is a disorganized and unhappy organization burning lots of cash. Because the company based its headcount and expenses on the expectation that the Sales organization will bring in revenue according to plan.

Customer Development 233

Customer Development Developer Customer Silicon Valley 233

VC Cafe

NOVEMBER 2, 2019

In SaaS the main benchmarks being measured are revenue growth, sales efficiency (unit economics), churn and burn rate. Example of Baremetrics revenue per user benchmarks. Part of the challenge in deep tech is getting to revenue and scaling it. Software as a Service (Saas) benchmarks. Consumer apps and services.

B2C 141

B2C Technical Review Startup Retention 141

Feld Thoughts

SEPTEMBER 16, 2011

Since SayAhh is in the pre-launch development stage, the company doesn’t have any revenue yet. This results in a gross margin of $0, where gross margin is revenue – cost of goods sold. The default Quickbooks setup uses “Income” to refer to “Revenue”.

Balance Sheet 125

Balance Sheet Fractional CTO Burn Rate Salary 125

The Next Web

JANUARY 22, 2014

Age (young founders are more likely to be able to pay themselves low salaries), company revenue (not just funding raised) and team size were flagged as potential influences on why a founder may pay him- or herself a particular amount. Startup revenue and founder salary. Founder age and salary.

Salary 152

Salary Founder Entrepreneur Burn Rate 152

YoungUpstarts

JULY 31, 2019

Founders need seed capital to get their operations up and running, and to begin generating revenue. For first time entrepreneurs or new entrants in a market, most initial problems start with failing to meet revenue projections — when product roll out is delayed, for example, or when it takes longer than expected to get revenue traction.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

Startup Professionals Musings

MARCH 25, 2010

Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. The holy grail is break-even, when revenues first catch up with the outflow. Then there are computer costs, trade shows, inventory, and a thousand other things. Cash flow is king. Financial projections can be intimidating.

Forecast 151

Forecast Startup Burn Rate .Net 151

YoungUpstarts

MAY 19, 2016

by Gadiel Morantes , chief revenue officer at Early Growth Financial Services. 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? A Jenga tower is a precariously built one.

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? Look for examples of similar companies and revenue multiples achieved from acquirers.

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? Look for examples of similar companies and revenue multiples achieved from acquirers.

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

Berkonomics

OCTOBER 5, 2023

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

Both Sides of the Table

JULY 13, 2013

You have been at five startups, you had an exit at your last company where you were the Chief Revenue Officer. 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?”

Cofounder 337

Cofounder Technical Cofounder San Diego Startup 337

Steve Blank

FEBRUARY 16, 2010

You would think that would be enough to get wrong, but entrepreneurs and investors compound this problem by assuming that all startups grow and scale by executing the Revenue Plan. All discussion focused on “missing the revenue plan.”. Revenue Plan Needs to Match Market Type. They don’t. What went wrong?

Revenue 232

Revenue Balance Sheet Hockey Stick Burn Rate 232

crowdSPRING Blog

OCTOBER 24, 2014

Benchmarking SaaS Startup Efficiency with Revenue per Employee Metrics | by @ttunguz – crowdspring.co/1sRVdjm. What is the Right Burn Rate at a Startup Company? | How to Ruin Your Company with One Bad Process | by @bhorowitz – crowdspring.co/11FYS9R. by @msuster – crowdspring.co/1qKWc0z. 1qKWc0z.

Social Media 95

Social Media Small Business Design Media 95

View from Seed

OCTOBER 24, 2019

As a first time founder, having a few million dollars in the bank after a successful seed raise may seem like a huge amount of capital, and it’s easy to lose discipline around your burn rate.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Up and Running

APRIL 22, 2020

This does not mean that you need 2-3 years’ worth of documents showcasing your revenue and cost of goods sold, but you’ll likely need reports that show at least 12-months of financial activity. Many startups are small, local businesses with hopes of eventually rapidly scaling—but they’re still establishing a track record.

SBA 139

SBA Forecast Software Review Business Plan 139