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 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

Both Sides of the Table

NOVEMBER 3, 2009

I’m not even talking about your 12-page Powerpoint presentation that you need to raise venture capital or to talk with potential biz dev partners. Let’s take your revenue line. Don’t know the running rate for engineers? How will your costs scale as your revenue scales. Or lower revenue assumptions.

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

Berkonomics

AUGUST 10, 2017

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 97

Silicon Valley Burn Rate Angel Investor Down Round 97

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 230

Revenue Balance Sheet Hockey Stick Burn Rate 230

The Next Web

MARCH 8, 2014

But at the end of the day, I’ve learned that being a partner at a successful early-stage VC firm is not quite as different from being a founder as you might think. Specifically, it feels eerily similar to how I felt when I was CEO at EchoSign when we were at about $4m in revenue. Until then, there are no profits to the VC partners.

Partner 138

Partner Burn Rate Early Stage IPO 138

David Teten

NOVEMBER 26, 2019

Sean Colrock, Director of Client Partnerships at Wiss & Company , suggests at a minimum you track: cash on hand; fume date; and burn rate. Andreas Rothe, CFO, Fragomen , observed, “One of the reasons for a budget is to align the various resources of the firm to projected revenues from clients and company objectives.

Agile 60

Agile Management Forecast Silicon Valley 60

The Equity Kicker

JANUARY 10, 2020

See below for a good description of what we like to see in deals at Forward Partners and what makes us different from other VCs. An interview with Nic Brisbourne, Forward Partners. They find a niche in the market where they can grow some revenues and then they raise some more money. And everyone’s lost a lot of money.

Partner 68

Partner Early Stage Portfolio Metrics 68

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

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. Listen, I know that if you like what we do then you’ll want a healthy supplier / partner. We were SMOKING cash. I can’t ship those as promised.

Entrepreneur 306

Entrepreneur Burn Rate Cofounder Sales 306

Berkonomics

MARCH 30, 2010

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Although young companies rarely measure profitability this repeatedly, more mature companies usually can bring from five to ten percent of revenues to the bottom line in the form of net profit.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

Steve Blank

NOVEMBER 18, 2010

For decades startups were managed by pretending the company would follow a predictable path (revenue plan, scale, etc.) The Revenue Plan – The Third Fatal Assumption. Notice that the traditional product introduction model leads to a product launch and the execution of a revenue plan. Albert Einstein. Ritualized Crises.

Burn Rate 247

Burn Rate Management Business Model Customer Development 247

Startup Professionals Musings

DECEMBER 15, 2014

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Bootstrapping 276

Bootstrapping Entrepreneur Startup Burn Rate 276

Both Sides of the Table

JUNE 17, 2017

70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue. They don’t want high burn rates but they will never fund slow growth. The Nature of Revenue Matters Of course revenue alone won’t tell you enough.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

ReadWriteStart

JANUARY 27, 2011

For a more elaborate explanation of the deal, please read my blog post 1M/1M: Alternative Financing For Startups Using A Sales Channel Partner. I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

Startup Professionals Musings

AUGUST 27, 2012

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Marketing, sales, and partners. Project both revenues and expense totals for next five years, and past three years. Show breakeven point, burn rate, and growth assumptions. Competition and sustainable advantage.

Elevator Pitch 247

Elevator Pitch Exit Strategy Burn Rate Merger 247

Startup Professionals Musings

JUNE 28, 2013

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Startup 264

Startup Burn Rate Bootstrapping Valuation 264

Steve Blank

FEBRUARY 22, 2010

I had been confused for years why I had to update an income statement each board meeting that said zero for 18 months before we had any revenue. Who are our partners? Regardless of your type of business model you should be tracking cash burn rate, months of cash left, time to cash flow breakeven. Retained 90+ Days.

Balance Sheet 298

Balance Sheet Startup Burn Rate Metrics 298

Startup Professionals Musings

JUNE 10, 2011

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Marketing, sales, and partners. Project both revenues and expense totals for next five years, and past three years. Show breakeven point, burn rate, and growth assumptions. Competition and sustainable advantage.

Elevator Pitch 234

Elevator Pitch Exit Strategy Burn Rate Merger 234

Startup Professionals Musings

MARCH 28, 2016

Every team member, from engineer to CEO, lives or dies based on cash flow, so the more they can tune their activities to revenue and expenses, the more valuable they become. Finding creative ways to fund activities.

Entrepreneur 120

Entrepreneur Burn Rate Leadership Salary 120

Gust

DECEMBER 7, 2014

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Bootstrapping 191

Bootstrapping Entrepreneur Startup Burn Rate 191

Steve Blank

AUGUST 27, 2012

Other weeks Yuri would be buffeted by the realities of his burn rate, declining bank account and depressing comments from customers. I offered that at Epiphany, my partner Ben’s office was the first place I would go when I thought I had new “insights.” Better, during that time brainstorm them with someone you trust.

Founder 316

Founder Cofounder Advisory Board Burn Rate 316

Startup Professionals Musings

MAY 19, 2010

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Marketing, sales, and partners. Project both revenues and expense totals for next five years, and past three years. Show breakeven point, burn rate, and growth assumptions. Competition and sustainable advantage.

Elevator Pitch 235

Elevator Pitch Exit Strategy Burn Rate Merger 235

View from Seed

OCTOBER 15, 2014

This is pulled from NextView’s board deck resource, which was compiled using a combination of real startup board decks and input from NextView’s founding partners: Rob Go , David Beisel , and Lee Hower. Here’s an exact, step-by-step breakdown of how we’d recommend structuring it. The seed stage is all about traction.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

Berkonomics

JULY 1, 2021

First, the VC’s ordered that the company ramp its burn rate (monthly losses in cash) to over $800,000 a month, which I could not fathom. But the CFO let the spending rate continue to increase out of balance with the board-approved budget which projected revenues to ramp, reducing the monthly cash burn.

Balance Sheet 62

Balance Sheet Cofounder Cash Position Burn Rate 62

Gust

AUGUST 19, 2012

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Marketing, sales, and partners. Project both revenues and expense totals for next five years, and past three years. Show breakeven point, burn rate, and growth assumptions. Competition and sustainable advantage.

Elevator Pitch 146

Elevator Pitch Exit Strategy Burn Rate Merger 146

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

Startup Professionals Musings

NOVEMBER 7, 2016

Partnering with outside entrepreneurial efforts is discouraged. 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

Berkonomics

DECEMBER 18, 2014

First, the VC’s ordered that the company ramp its burn rate (monthly losses in cash) to over $800,000, which I could not fathom. But the CFO let the spending rate continue to increase out of balance with the board-approved budget which projected revenues to ramp, reducing the monthly cash burn.

Balance Sheet 71

Balance Sheet Burn Rate Cash Position Forecast 71

BeyondVC

OCTOBER 22, 2008

Despite these tough times, there are still some bullheaded companies who think they can grow their way out of this mess or find the right M&A partner to bail them out.    In addition, I can also promise you that any large or small company looking to buy a startup does not also want to pick up a large burn rate. 

Burn Rate 60

Burn Rate Merger Portfolio Partner 60

Hearpreneur

JULY 7, 2019

Over the next 10 years, entrepreneurship will reach a peak of new startups, increasing the burn rate of founders and the failure rate for new ecosystems. With this exponential growth, we’re likely to reach a point where the only way to succeed is to connect and partner with similar niche-based entrepreneurs.

Entrepreneur 90

Entrepreneur Distribution Employee Arizona 90

BeyondVC

JUNE 11, 2007

Trust me, a number of companies got burned with this during the Internet boom when their businesses were based on wildly inflated revenue projections and unilimited capital resources. Just when you needed another month or two to sign that strategic deal, the venture debt guys would come in and pull the rug from under you.

Intellectual Property 60

Intellectual Property Covenant Warrant Equity 60

Both Sides of the Table

MARCH 30, 2016

Mark dutifully went to partner meetings, back-channel references began, firms started calling existing VCs to “test prices” and we started debating whom our best partner would be. Here are some stats to give you a sense: • Year over year revenue grew 51% in 2015 and we’re forecasting the same again for 2016.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Up and Running

AUGUST 21, 2014

The other thing that they’re going to ask you is average revenue per account or per user or per customer. You need to understand how much money is brought in by each individual account or user when looking at the overall revenue. It’s what’s going to make you most attractive to an investor. If we increase our-.

Metrics 84

Metrics Startup Churn Rate Forecast 84

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

abovethecrowd.com

FEBRUARY 24, 2015

As a result, a “late-stage” financing is no longer reserved for high-revenue, pre-profitability companies getting ready for an IPO; it is simply any large round of financing done at a high price. You must subtract it from your top-line revenue. You should not pay a net revenue multiple for a gross revenue disclosure.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Both Sides of the Table

FEBRUARY 14, 2016

Many experienced partners are funds have 7-10 boards and most of these will need more capital. Huge funding increases lead to massive wage inflation, rent inflation and thus higher burn rates. forward revenue for SaaS businesses when in the years before it had been less than 5x. This is how VCs feel.

Valuation 150

Valuation Down Round Startup Later Stage 150