Burn rate is a matter of life and death—startup life and death. It’s the difference between companies that survive for years and those that shutter within months. It’s a critical metric for any investor considering supporting your business. And it’s frequently misunderstood and underestimated by the people who should be paying attention to it most.
Here’s what you need to know about burn rates, including what they are, why they matter, and how to calculate yours—and determine if it’s where it should be.