Burn Rate: Burn rate refers to the rate at which a company is using up its venture capital. A company that is spending say $100,000 more per month (the typical period of time for which a burn rate is quoted) is said to be burning at a rate of $100,000 per month.
This measure gets to be especially important when a company is not hitting plan. The measure took on tremendous market importance in 2001 through 2003 when many Internet ventures were not hitting plan and many venture capitalists were not in a mood to invest in Internet startups.
Of course, the solution to a burn rate problem is to bring expenses into line with revenues. For a pre-revenue company, that simply isn't an option.
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