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High Burn Rates Result in Short Startup Runways

Startup Professionals Musings

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).

Investors Measure Entrepreneurs By Cashflow Mileage

Startup Professionals Musings

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.

Startup Runway Length Depends on Your Burn Rate

Startup Professionals Musings

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).

8 Questions Investors Use to Bypass Startup Hype

Startup Professionals Musings

They should be asking to speak to you if you are a potential investor or a superstar hire. How much “skin” is already in the game? Now you know.

Burn Rate

charliecrystle.com

Fred posted on Burn Rate today. That's why hiring someone early on is such a big commitment. So keep a close eye on your cash, your burn, and your revenue. It's a good read--definitely go read it after this post. But Fred's example is based on a funded company, where the amount of investment is known and up front.

When Burn Rate Outweighs Enthusiasm

Anything's Possible

Despite that nearly all venture-backed startups burn capital unsustainably, Uber’s level of spending is viewed as particularly problematic among its naysayers. It will be able to sustain its burn rate based on that excitement unless something surprising happens to its business, or it goes public. How is this possible? million.

Startup Sales – Why Hiring Seasoned Reps May Not Work

Both Sides of the Table

One of the biggest mistakes I see early-stage startups making is hiring “seasoned&# sales professionals or hiring people too senior, too early.

5 Steps To Maximizing Your Startup Cash Flow Runway

Startup Professionals Musings

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.

GBP | Dirk Paessler | How to Grow & Stay Agile. Part 1: Top 6 Business Decisions

Business of Software Blog

Decision 3: The Team Hires the Team. After this trial day, we make our hiring decision as a team. Dirk Paessler’s Inside View.

Agile 17

After Funding, Watch Burn Rates And Beware The Tyranny Of Incrementalism

Anything's Possible

At first the team is small and the initial burn rate barely moves the dial on the capital raised. No one wants to feel underpaid, and how big a deal is an extra $10K a month to the company’s burn rate when one or two million dollars just hit the bank account. Then the hiring begins. Not hire any people?

What Everyone Should Take Away from Twitter’s 8% Staff Reductions

Both Sides of the Table

” It goes like this: What is your net burn rate? But I’m certainly willing to say RIP Excess Burn. Does this suck?

8 Good CFO Attributes That Every Entrepreneur Needs

Startup Professionals Musings

Investors love to see a former CFO running a new business. In the case of GrubHub’s Adam DeWitt, he ended up with a salary exceeding that of the CEO.

10 Indications That Your Startup Role Is Killing You

Startup Professionals Musings

Too often they are also hesitant, inexperienced, and fearful of hiring people or a mentor to be the partner they need. Seek help or get out.

3 Ways To Ensure Your Startup Has A Top-Notch Team

YoungUpstarts

While you absolutely need to keep an eye on earnings and burn rate, human capital is ultimately the fuel that makes the machine run.

8 Questions Before You Join Or Invest In A Startup

Startup Professionals Musings

Early stage burn rates over $50K per month, or a runway of less than six months may indicate an inefficient or desperate startup.

3 Ways Structure Can Take Your Tech Startup To New Heights

YoungUpstarts

Use burn rate as an example. by  Gadiel Morantes , chief revenue officer at  Early Growth Financial Services. Build It Right.

IP 38

Validate The Pedigree Of A Startup Before You Jump

Startup Professionals Musings

Early stage burn rates over $50K per month, or a runway of less than six months may indicate an inefficient or desperate startup.

10 Clues That An Entrepreneur Is In Over His Head

Startup Professionals Musings

Too often they are also hesitant, inexperienced, and fearful of hiring people or a mentor to be the partner they need. Seek help or get out.

9 Metrics Every Entrepreneur Should Know About Their Business Offhand

Up and Running

Renewal Rates. If you’re selling anything, understanding renewal rates is absolutely critical. Burn Rate. Per lead?

Founders – Use Your Down Round To Clean Up Your Cap Table

Feld Thoughts

” Many companies have hired ahead of their growth rate because they had the cash to do so. In our portfolio, we generally don’t have this problem because we aren’t big fans of either (a) overfunding companies or (b) escalating burn rates based on headcount. Go read it now – I’ll wait.

8 Key Questions To Expect In Investor Due Diligence

Gust

They should be asking to speak to you if you are a potential investor or a superstar hire. Image via LeadChangeGroup.com. Now you know.

Your startup is loved locally, but how do you expand it globally?

The Next Web

Airbnb’s experience shows how local engagement strategies such as these do not have to increase a startup’s burn rate considerably.

An Alternative to Board Decks Some Seed VCs Actually Prefer

View from Seed

Team:  Hires, fires, departures, responsibility changes, major promotions, and your org chart. Obviously, this is NextView’s opinion.

Why Founders Should Know How to Code

Steve Blank

Speed keeps cash burn rate down while allowing you to converge on a repeatable and scalable business model. Book of Five Rings. Whoah.

Failure and Redemption

Steve Blank

We hired everyone according to our plan. “What’s gone and what’s past help. Should be past grief.” So here’s mine.

Startup Revenue Milestones

K9 Ventures

By carefully managing your burn rate and steadily growing revenue, you can now survive — almost forever. Was price an issue? 1K/month.

Create Structure out of the Gate and You’ll Thank Yourself Later

Feld Thoughts

They close on the $750k, hire a buddy or two, buy some Macs, and get to work. Things start to get a little fuzzy in terms of priorities, but not to fret, the new office is coming along really well with all of the hiring! Three months in, the burn is now at $70k/month. This may seem counterintuitive, even even a pain in the ass.

8 Pieces of Advice For CEOs That Need To Scale Their Startups

YoungUpstarts

Burn rate: Seeing company grow fast is both exciting and overwhelming experience. Hire Talent. Hire Proactively. Validate.

8 Key Questions To Expect In Investor Due Diligence

Startup Professionals Musings

They should be asking to speak to you if you are a potential investor or a superstar hire. How much “skin” is already in the game? Now you know.

The Importance of Benevolent Dictators

Both Sides of the Table

Should you increase your burn rate by adding 2 senior hires who will help you ship faster or sell more but then have less time for fund raising?

Begin With a Job at a Startup, Then Start Your Own

Startup Professionals Musings

People hire people they know, so nurture your relationship with friends already active in startups. What's the monthly burn rate?

Blue Collar VC

Mucker Lab

How can we tell founders to stay lean, keep focused on their customers, and keep burn rates low if we cannot walk the talk and eat our own dog food? The ones who would rather hire a sales guy than spend money on flavored morning lattes. This is our third fund, which might make us seem like grumpy, rich, old VCs. We understand.

10 Startup Shortcuts That Will Be Back To Haunt You

Gust

Be quick to hire and slow to fire. Hiring after one interview is like hopping a red-eye to Vegas to get married after one date.

5 Shark Tank Lessons Every Startup Should Understand

Up and Running

Investors like valuation to relate to actual business numbers, such as sales, gross margin (price less direct costs), and burn rate or fixed costs.

On the Road to Recap:

abovethecrowd.com

The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate. The same thing happened to many Internet stocks. Emotional Biases.

“Venture Assistance”: A Philosophical View Of What Boards Should And Should Not Do

techcrunch.com

Understanding how to avoid needing to hire a CEO or what to do when you need to hire a CEO are all better informed by a wealth of previous mistakes.

How Great, Operationally-Focused CFO’s Can Transform Your Business

Both Sides of the Table

For a well-funded seed company I have controversially recommended hiring a great office manager that doubles as an administrative assistant. This happens because many CEOs are passionate, market-driven people who are constantly trying to launch new products, win contracts, get press, hire staff and woo VCs. Hire a great CFO.

Clear Eyes, Full Heart: Beating The Series A Crunch

OnStartups

Lowering Burn Rate. The changes in product and burn rate have put us on a path to reach cash flow positive before we run out of capital.

The Co-Founder Mythology

Both Sides of the Table

Hire your co-founder. Involve them in fund raising, hiring, strategy, etc. like how much burn rate), whether to sell the company, etc. Startups have high failure rates. So trust me when I tell you that you can hire incredibly talented people for 30% of your company. It’s only 3 minutes, 44 seconds.

Corporate Perks Will Doom Your Entrepreneur Dreams

Gust

The result is a startup with an exorbitant burn rate, and a very unhappy entrepreneur. Image via ExecutiveSky.ch. Executives have perks.