Burn Rate is calculated as monthly revenues less expenses. It is typically negative because expenses are so high for a startup relative to revenues. Burn rates are helpful in measuring how quickly a startup will go through all of its cash.Example:
Monthly Burn = (cash balance at the beginning of the year minus cash balance at the end of the year)/12Raising 12 months of burn is not enough
Who are these people?
Vela Wood is a Texas based, startup focused law firm with a local feel and a global impact. VW has counseled thousands of small businesses and startups and facilitated nearly $500M in early-stage financings. For more information please visit our website.