But startups don't just raise money because they need it, they also have to be given it. That said, there is a question of what parts of this are causal that we plan to tease apart in future analyses.
How many startups needed to but were unable to raise capital in successive rounds? If the failure rate of successive raise attempts is low then I'd suspect that the driving factor would be the desire to raise capital.
Given that we've been in a record bull market for nearly a decade and there are signs of slowing, it may be hard to extrapolate these findings to the future. It would be interesting to try to model what things would have looked like on this data set at lower levels of investment. This type of information would be hugely valuable if there is an investment regime change occurring.
Agreed that from a data perspective, it would be fascinating to see how an investment regime shift would change these benchmark indicators, which should also be useful to startups.
Right, we would define what you're pointing to as a subset of cash flow - you are specifically highlighting "liquidity" when you talk about the lag there, but I agree we could have been more clear. 82% is referring to failure for financial reasons vs. management, regulatory, etc.
Henrique here co-founder of Brex (YC W’17). I wanted to introduce the HN community to some new data we gathered at Brex as part of our new blog.
We specifically looked to highlight data that is not available to other startups.
+ We focused on startup cash burn rates by funding stage (pre-seed, seed, Series A, etc.) because for many startups there is always this question about how much you should be burning.
+ Separately, we looked at some of the most popular vendors for startups on Brex in categories like cloud services, CRM, rideshare etc.
+ We analyzed the size of the "stealth" startup market. For Brex, it was hard being in stealth for over a year and it's helpful to know just how many of you are out there
+ We looked at regional trends in startup cash burn to help startups adjust their benchmarking for their locations
Note, we were careful to aggregate the data and only share things we thought could actually help startup founders and early employees
Doing a COL adjustment/average employee salary to burn rate could be interesting to normalize the data. In other words is the salary of engineers driving the disparity or are there other factors behind the burn rates.
Exactly. Our plan going forward is to start breaking down burn by major factors like salary, rent, vendor spend.
Another interesting one we're looking at is the breakdown of burn by industry and stage. We can also then compare the major factors across these breakdowns to give really good comparisons for startups.
Burn is the numerator, $ raised or cash-in-the-bank is the denominator.
Would be really good to get a 2x2 grid of monthly burn x money raised for Series A companies. Or if that's too hard, a "Months the Series A will last at at current burn rate" bar chart.
Hey! Indeed we do have very good traction. But the fact that you can get business credit with zero assets or revenue is true if you're wiling to personally guarantee the card, because then it's just like getting a personal card but with your business name on it. I as an immigrant without a lot of personal credit history was unable to get a card when starting Brex. Today, we raised over $57m and we're still unable to get cards from banks. We're the first card to actually underwrite startups and give them a card with high limits and no personal guarantee.
So the deal here is: you give us your bank credentials and we won’t require any kind of personal guarantee. Other cards wont get your bank data but will require you to personal guarantee. Fincity is used by intuit/quickbooks, that’s why we chose them.
We will use your transaction data for underwriting purposes. We contractually have the ability to commercialize your data in an aggregate way, so for example we could say “starups on brex are spending more money on saas every month this year compared to last year”. But never the name of specific information about your company. Don’t worry, your competitors won’t have access to your data.
