The rate at which a company consumes cash, typically measured monthly, especially relevant for startups and companies that are not yet profitable. It indicates how quickly a company is spending its available cash and helps determine how long current funding will last.
The term emerged from Silicon Valley startup culture in the 1990s, using the metaphor of 'burning' through cash like fuel. The imagery comes from rocket science, where burn rate refers to how quickly fuel is consumed. It gained widespread use during the dot-com era when many startups operated at losses while seeking profitability.
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