5 Keys To Minimizing The Burn Rate For Your Startup

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. It doesn’t take a financial genius to recognize that you need to keep your burn rate low. burn rate entrepreneur runway startup

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 look at your burn rate to see how efficient and effective you are at running the business.

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). Investors also look at your burn rate to see how efficient and effective you are at running the business.

Don’t Get Burned By Your Startup 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. Investors look at your burn rate to see how efficient and effective you are at running the business. Cash is the fuel of every startup.

ProfessorVC: Burn Rate

Professor VC

Burn Rate. The burn rates of my portfolio companies is certainly top of mind right now, but thats not what this post is about. Since Im not a fan of any of those genres, I have been looking forward to the release of his latest work, Burn Rate. Unable to conceive, they hire Annie Day as a surrogate to bear their fertilized egg to term. Burn Rate. ProfessorVC. The last blogger in Silicon Valley. Wednesday, July 22, 2009.

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. It doesn’t take a financial genius to recognize that you need to keep your burn rate low.

8 Questions Investors Use to Bypass Startup Hype

Startup Professionals Musings

My advice to founders out there is to not volunteer too much, but be open and honest in the face of direct questions like the following: What is your burn rate and runway today? They should be asking to speak to you if you are a potential investor or a superstar hire.

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. It doesn’t take a financial genius to recognize that you need to keep your burn rate low.

Is the Lean Startup Dead?

Steve Blank

He just hired Meg Whitman. Startups wrote business plans, generated expansive 5-year forecasts and executed (hired, spent and built) to the plan. 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 262

When to hire a VP of Sales

BeyondVC

A clear kiss of death that I have seen more often than not is hiring a VP of Sales too early. On top of that, you figure that you want to hire the senior guy first so he can bring in his own troops. Hiring a VP of Sales too early can cost you dearly. All VPs need people to manage which means your VP of Sales will want to hire a bunch of reps to grow the business. Remember don’t hire a VP of Sales to only have them hunting for dodo birds.

10 Clues That It May Be Time To Seek Outside Help

Startup Professionals Musings

Too often they are also hesitant, inexperienced, and fearful of hiring people or finding a mentor to be the partner they need. They let the burn rate go up too fast, and the business burns down before it really starts.

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

Both Sides of the Table

But like many companies over the past five years it hired aggressively and probably had some degree of straying off of a core strategy and some amount of excess jobs relative to its current revenue forecasts and opportunities. ” It goes like this: What is your net burn rate?

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. They let the burn rate go up too fast, and the business burns down before it really starts.

8 Questions Before You Join Or Invest In A Startup

Startup Professionals Musings

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?

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. They let the burn rate go up too fast, and the business burns down before it really starts.

Validate The Pedigree Of A Startup Before You Jump

Startup Professionals Musings

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?

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. Even though the growth is rapidly increasing, the burn rate can equally increase too so its essential to plan advance and evaluate the options based on that. Hire Talent.

An Alternative to Board Decks Some Seed VCs Actually Prefer

View from Seed

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard. An example using our fake mobile startup: Section 7: Burn, Budget, and Runway.

8 Good CFO Attributes That Every Entrepreneur Needs

Startup Professionals Musings

While the CFO usually takes the lead in finding professional investors, everyone needs to look for ways to reduce the burn rate and maximize alternative funding sources, including bartering for services, finding partners willing to accept deferred payments and talking to friends and family.

Crisis Management by Firing Executives – There’s A Better Way

Steve Blank

Surprisingly we have never explicitly articulated or understood that what’s really happening when we hire a new VP or CEO in a startup is that the newly hired executive is implicitly pivoting (radically changing) some portion of the business model.

8 Big-Company Habits That Don’t Work In A New Venture

Startup Professionals Musings

The longer you wait to start your own business, the higher the default burn rate, and the less happy you will be to take a financial step down.

Salary 221

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? Personalities are strong, and the hiring process for good ones is tougher than big corporations.

3 Ways Structure Can Take Your Tech Startup To New Heights

YoungUpstarts

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? by Gadiel Morantes , chief revenue officer at Early Growth Financial Services.

IP 151

Failure and Redemption

Steve Blank

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. We hired everyone according to our plan.

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. And that he could identify the resources needed, (outsourced contract developers who could build it for him) and he would hire a partner to do so.

It Must Be A Marketing Problem

Steve Blank

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. With that initial sales “success” they began to hire and staff the sales department per the ”plan.” Cash was flowing out of the company and the VP of Sales was still hiring.

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. Depending on your startup’s needs, it can be a toss-up on whether to hire for attitude or skill.

Hiring 141

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. This impacts every decision related to your business, from hiring more staff to expanding product offerings to investing in marketing. – Ben Rubenstein , Yodle. Burn Rate.

8 Key Questions To Expect In Investor Due Diligence

Startup Professionals Musings

My advice to founders out there is to not volunteer too much, but be open and honest in the face of direct questions like the following: What is your burn rate and runway today? They should be asking to speak to you if you are a potential investor or a superstar hire.

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. At month six, one of the early hires leaves, a developer who turns out wasn’t a good fit. The burn is now at $90k/month as they had to hire a “customer delight” person to handle the beta process.

Equity 325

Corporate Perks Will Doom Your Entrepreneur Dreams

Gust

The result is a startup with an exorbitant burn rate, and a very unhappy entrepreneur. In a big company, you get used to having an IT team around configure your computer, a personnel specialist for hiring and firing, and a marketing team for strategy. Image via ExecutiveSky.ch.

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. Four years after founding and bootstrapping Mucker Capital , we are pleased to announce the close of a new $45 million fund, Mucker III. This is our third fund, which might make us seem like grumpy, rich, old VCs.

How to Find a Job at the Right Startup for You

Startup Professionals Musings

People hire people they know, so nurture your relationship with friends already active in startups. What's the monthly burn rate? Personalities are strong, and the hiring process for good ones is tougher than big corporations.

Death By Revenue Plan

Steve Blank

raised their voices in a annoyed investor tone) that the headcount and its attendant burn rate combined with the lack of revenue meant the company would run out of money much sooner than anyone planned.

Failure and Redemption

Steve Blank

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. We hired everyone according to our plan.

Corporate Perks Will Doom Your Entrepreneur Dreams

Startup Professionals Musings

The result is a startup with an exorbitant burn rate, and a very unhappy entrepreneur. In a big company, you get used to having an IT team around configure your computer, a personnel specialist for hiring and firing, and a marketing team for strategy.

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. But, occasionally we find ourselves in the position on the board of a company where, as you look forward, you realize you are burning more than you should be for the stage you are at.

Startup Revenue Milestones

K9 Ventures

And in order to do that they need to either raise capital to be able to hire a team by paying them real dollars or recruit co-founders who are willing to share the journey based on the equity stake and bootstrap the company.

8 Key Questions To Expect In Investor Due Diligence

Gust

My advice to founders out there is to not volunteer too much, but be open and honest in the face of direct questions like the following: What is your burn rate and runway today? They should be asking to speak to you if you are a potential investor or a superstar hire.

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. One of the most important parts of taking on an expansion process is hiring the right local talent, a time consuming and challenging factor.

Global 161

10 Startup Shortcuts That Will Be Back To Haunt You

Startup Professionals Musings

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. On the other end of the process, don’t hesitate to pull the trigger fast when a new hire isn’t working, but don’t forget to be human and follow all the steps.

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? I believe that groups coming together to make tough decisions driven by consensus tend to make poor decisions.

Keep Asking Questions

ithacaVC

Unfortunately I have been burned a few times when asking more questions could have avoided the burn. Ask: why is your burn rate so high and is it sustainable? Did you hire too quickly? I have encountered a few situations lately where I found myself asking a lot of questions. This is mostly because I sit on many portfolio company boards for which I simply do not understand at a fundamental level the technologies. But sometimes it results from lousy answers.