Definition - What does Burn Rate mean?
Burn rate is the pace at which a startup company goes through its cash reserves. Although burn rate is not exclusively a tech term, it rose to prominence with the dot-com boom. A company with a high burn rate is faced with either securing more venture capital and diluting its existing equity, or eventually going under.
Techopedia explains Burn Rate
During the dot-com bubble, tech start-ups had access to an unprecedented amount of capital and they went through it very quickly. Although some investors were worried by the speed at which cash was disappearing, others looked at a high burn rate as an opportunity to swoop in late and grab up more equity. The bursting of the bubble caused a re-evaluation of tech investing and resulted in later start-ups having to adjust to much less available cash and expectations of much lower burn rates.
"Techopedia" on Twitter
Sign up for Techopedia's Free Newsletter!
Join thousands of others with our weekly newsletter
The 4th Era of IT Infrastructure: Superconverged Systems:
Learn the benefits and limitations of the 3 generations of IT infrastructure – siloed, converged and hyperconverged – and discover how the 4th...
Approaches and Benefits of Network Virtualization:
Businesses today aspire to achieve a software-defined datacenter (SDDC) to enhance business agility and reduce operational complexity. However, the...
Free E-Book: Public Cloud Guide:
This white paper is for leaders of Operations, Engineering, or Infrastructure teams who are creating or executing an IT roadmap.
Free Tool: Virtual Health Monitor:
Virtual Health Monitor is a free virtualization monitoring and reporting tool for VMware, Hyper-V, RHEV, and XenServer environments.
Free 30 Day Trial – Turbonomic:
Turbonomic delivers an autonomic platform where virtual and cloud environments self-manage in real-time to assure application performance.