What’s the best way to manage your burn-rate?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Burn Baby Burn – AVC

Valuations can be fixed. You can do a down round, or three or four flat ones, until you get the price right. But burn rates are exactly that. Burning cash. Losing money. Emphasis on the losing. And they are indeed sky high all over the US startup sector right now. And our portfolio is not immune to it

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Burn Rates: How Much? – AVC

A good rule of thumb is multiply the number of people on the team by $10k to get the monthly burn. That is not the number you pay an employee. That is the “fully burdended” cost of a person including rent and other related costs. So if you use that mutiplier, my suggested team sizes are 5, 10, and 25 respectively for the three development stages listed above.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
How Much To Burn While Building Product – AVC

The first stage is what I called “Building Product Stage” and I suggested that a burn rate of $50k/month was appropriate for that stage.
I got a fair bit of pushback in the comments for that part of the post. My favorite push back came from The Kid, who said: 50k a month?!?!??! maybe it is such in venture world, but if you’re a broke ass fool bootstrapping his/her way, try 5k per founder a month until you have paying customers. if you’re hardcor… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Burn Rates: How Much? – AVC

Building Usage Stage – I would recommend keeping the monthly burn below $100k per month at this stage. This is the stage after release, when you are focused in iterating the product, scaling the system for more users, and marketing the product to new users. This can be done by the same team that built the product with a few more engineers, a community manager, and maybe a few more dollars for this and that.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Burn Rates: How Much? – AVC

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. You start to hire a management team, a revenue focused team, and some finance people. This is the time when you are investing in the team that will help you bring in revenues and eventually profits. I would recommend keeping the burn below $250k per month at this stage.

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

If you have a strong lead investor known for backing his or her entrepreneurs in tough times and that investor gives you a sense for her comfort level in writing your next check then you can have a higher burn rate than if you don’t feel you have a strong lead investor. If you have mostly angels or don’t feel your existing investor can support you without new capital from the outside then you might want a smaller burn rate. Remember those party r… (read more)

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

It is also impossible to tell you the right burn rate for your company without knowing your risk tolerance. Quite simply – some people would rather “go hard” and accept the consequence of failure if they don’t succeed. Other people are more cautious and have a lot more at stake if the company doesn’t succeed (like maybe they put in their own money or their family’s money).

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

Companies that have low burn rates buy themselves hugely better probabilities of getting lucky over time. You’ve gotta be willing to be not too formulaic about when it’s time to give up or be persistant.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Tightening Your Belt – AVC

When the business becomes profitable more quickly, when the cash runway extends by a year or more, when the budget is no longer stretched and new initiatives are now possible, the team understands the value of belt tightening and embraces it as much as the investors do.
If you’ve been a growth spurt for the past few years and have not taken the time to do some belt tightening, it might be a good time to do that.

Eric Ries (Author, The Lean Startup)
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Measuring runway through the lens of pivots rather than that of time suggests another way to extend that runway: get to each pivot faster. In other words, the startup has to find ways to achieve the same amount of validated learning at lower cost or in a shorter time. (p.160)

Ron Conway (Founder & Co-Managing Partner @ SV Angel)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

A million bucks better last over a year, roughly.