Burn Rates: How Much? - Vimperator
In the comments to last week's Burn Rate post, I was asked to share some burn rates from our portfolio. I can't do that. But an alternative suggestion was to write a post suggesting some reasonable burn rates at different stages. The following applies to software based businesses, and most particularly web and mobile software businesses. Building Product Stage – I would strongly recommend keeping the monthly burn below $50k per month at this stage. Building Usage Stage – I would recommend keeping the monthly burn below $100k per month at this stage. Building The Business Stage – This is when you've determined that your product market fit has been obtained and you now want to build a business around the product or service. A good rule of thumb is multiply the number of people on the team by $10k to get the monthly burn. Once you get the business profitable, you can scale the team larger and larger to meet the needs of the business. One final caveat – there are outliers.
Related: What you need to know in Finance / raising money
Related: Board Observers Weekly, September 30 2014