what is the burn rate 
the burn rate represents the speed at which an unprofitable company consumes its cash reserves it s the rate at which a startup company is spending its venture capital to finance overhead before generating positive cash flow from operations it s a measure of negative cash flow burn rate is most often a consideration for young life sciences or technology companies without profits and revenue in some cases it s usually quoted in terms of cash spent per month it would mean that a company is spending 1 million per month if it s said to have a burn rate of 1 million investopedia jiaqi zhouunderstanding the burn ratethe burn rate is used by startup companies and investors to track the amount of monthly cash that a company spends before it starts generating income a company s burn rate is also used as a measuring stick for what s referred to as its runway the amount of time the company has before it runs out of money a company s runway would be 10 months if it has 1 million in the bank and spends 100 000 a month derived as that would be a company can reduce its gross burn rate by producing revenue and or cutting costs such as reducing staff or seeking cheaper means of production 