Burn Rate

The rate at which a new company uses up its venture capital to finance overhead before generating positive cash flow from operations. In other words, it's a measure of negative cash flow.

Burn rate is usually quoted in terms of cash spent per month. For example, a burn rate of 1 million would mean the company is spending 1 million per month. When the burn rate begins to exceed forecasts, or revenue fails to meet expectations, the usual recourse is to reduce the burn rate (which, in most companies, means reducing staff).


Investment dictionary. . 2012.

Look at other dictionaries:

  • Burn rate — is a synonymous term for negative cash flow. It is a measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to start making a profit, find additional funding, or… …   Wikipedia

  • burn rate — Used in venture capital financing to refer to the rate at which a startup company expends capital to finance overhead costs prior to the generation of positive cash flow. Bloomberg Financial Dictionary * * *    ► See Cash Burn. * * * burn rate UK …   Financial and business terms

  • burn rate — n. The rate at which a newly formed company spends cash on startup costs, research and development, and other expenses. Example Citation: The company has about $ 500,000 in the bank, and Gardner has agreed to work for $ 50,000, half his normal… …   New words

  • burn rate — n. the rate at which an enterprise spends money, especially venture capital, in excess of income the corporation lays off workers to cut burn rate …   Useful english dictionary

  • burn rate — See cbr process controlled burn rate …   Dictionary of automotive terms

  • burn rate — (Economics) rate of spending capital by a company until it starts to earn a profit (usually a new company) …   English contemporary dictionary

  • burn rate — The rate at which a new company or project uses up its funding before cash begins to come in from its trading activities. It is frequently used to evaluate high tech or venture capital investments …   Big dictionary of business and management

  • Burn rate (chemistry) — In chemistry, the burn rate is a measure of the linear combustion rate of a compound or substance such as a candle or a propellant. The industry recognized nomenclatures are mm/s or in/s for millimeters per second or inches per second… …   Wikipedia

  • Cash-Burn-Rate — Die Cash Burn Rate (deutsch etwa: Geldverbrennungsrate) bezeichnet 1.) die Geschwindigkeit, mit der die finanziellen Mittel aufgebraucht werden oder 2.) den Zeitraum, in dem die liquiden Mittel eines Unternehmens vollständig aufgebraucht werden.… …   Deutsch Wikipedia

  • cash burn rate — UK US noun [C] (also burn rate) ► FINANCE the speed at which a company spends the money that is available to it, when it is not making more money than it spends: »We are not concerned about our cash burn rate, we have £117m in the bank which is… …   Financial and business terms


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.