Burn Rate
Example
If a startup has $1 million in funding and is spending $100,000 per month to cover expenses, its burn rate is $100,000 per month. This means the company will run out of cash in 10 months if it doesn't generate revenue or secure additional funding.
Definition
Burn rate refers to the rate at which a company is spending its capital, typically venture capital, to fund operations before it starts generating a positive cash flow. Burn rate is an important metric for startups, as it indicates how long they can sustain their operations before needing additional funding.
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