Rules Of Thumbs

A good rule of thumb for an appropriate start-up burn rate is about $100,000 per month.  For example, a web-based startup should be able to operate for one year if they raise a $1 million dollar angel round.  This will equate to approximately 3 founders at the time of the equity raise, to hiring 7 people for a total of 10 people at the end of 1 year.  The cash will be burned on the salaries and operating expenses of the startup and should provide enough runway to eliminate some of the initial market and technical risks so that the startup can raise a venture round at a favorable valuation.

Tags: angel, burn rate, employees, hire, Valuation, Venture Capital

This entry was posted on Tuesday, February 26th, 2008 at 10:33 pm and is filed under Startup, Valuation, Venture Capital. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.