Cash Burn

Formal

Network build and service delivery can take many years, requiring significant long term funding. Budgets detail how much is needed, and sufficient funds raised - by share or loans. Cash Burn is the net cash consumed or ‘burnt’ each month and when compared to the funds still held gives the time you have left using your current cash resources. Typically quoted as ‘we are fully funded until December 2003’.

Real-world Example

A startup has $2M in the bank and is spending $150k more than it earns each month. At that burn rate, it has just over 13 months of runway before it needs to raise more funding.