Introduction

Generally, investors will ask you what is your Burn Rate when looking for investment. But what is Burn Rate?

Burn Rate

Burn rate is the rate at which a company is losing money. It is typically express in monthly terms. E.g. “the company’s burn rate is currently RMB 100K per month”. In this sense, the word “burn” is a synonym term for negative cash-flow.

It is also measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to start making profit, find additional funding or close down.