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Large burn? You mean any burn at all… Money there to to be spent over the next six months is now not available. Payroll in Silicon Valley is going to be a mes

Large burn? You mean any burn at all… Money there to to be spent over the next six months is now not available. Payroll in Silicon Valley is going to be a mess this week. Companies that lend to startups short term are going to have a busy time.

berkle4455 4y ago
[deleted]
- lmeyerov 4y ago
  Yep traditional advice is don't burn > 100k / mo when early stage, and most lower. So 2mo+ payroll fine for a normal seed, early A. Later stage are normally more sensitive. It's also a real issue with profitable companies whose outflows are at that level and are considering bigger purchases -- I'd be bailing if we were there just bc that. Except the last couple years have been bonkers with little revenue / spending alignment during fundraising. Early stage burns are above that level, which makes the situation worse for current crop of co's. Ouch and good luck :(
berkle4455 4y ago
For sure. The post I was replying to was for a seed stage company though. They’ve got $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k
- sroussey 4y ago
  Sure, pre-seed. Seed is usually $2m-5m these days, and received all at once (mostly) as compared to VCs which do capital calls.
- zamnos 4y ago
  A company with 26 people, each making $120k (pre-tax), or a company with 51 people, each making $60k/yr pre-tax is enough to miss payroll this week if there's only $250k to draw from, and that's not accounting for any other expenses (like, say an AWS/GCP bill, though hopefully you're net-60 with them). CEO/CFO's also now got two weeks to come up with another $250+k in a complex environment.
- twelve40 4y ago
  but do you automatically get access to the insured part, or do you have to sit around and wait for a few months until FDIC hashes it out with whoever? it could be really a matter of life and death for some startups. Update: yes, seems like the insurance part is pretty quick https://twitter.com/MMikeMMa/status/1634245929481175040/photo/1 https://twitter.com/MMikeMMa/status/1634245929481175040/phot...
bombcar 4y ago
The IOUs that FDIC hands out can be borrowed against, or sold. There will be a lot of people active this week trying to buy them at favorable rates

berkle4455 4y ago

[deleted]

lmeyerov 4y ago
Yep traditional advice is don't burn > 100k / mo when early stage, and most lower. So 2mo+ payroll fine for a normal seed, early A. Later stage are normally more sensitive. It's also a real issue with profitable companies whose outflows are at that level and are considering bigger purchases -- I'd be bailing if we were there just bc that. Except the last couple years have been bonkers with little revenue / spending alignment during fundraising. Early stage burns are above that level, which makes the situation worse for current crop of co's. Ouch and good luck :(

berkle4455 4y ago

For sure. The post I was replying to was for a seed stage company though. They’ve got $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k

sroussey 4y ago
Sure, pre-seed. Seed is usually $2m-5m these days, and received all at once (mostly) as compared to VCs which do capital calls.
zamnos 4y ago
A company with 26 people, each making $120k (pre-tax), or a company with 51 people, each making $60k/yr pre-tax is enough to miss payroll this week if there's only $250k to draw from, and that's not accounting for any other expenses (like, say an AWS/GCP bill, though hopefully you're net-60 with them). CEO/CFO's also now got two weeks to come up with another $250+k in a complex environment.
twelve40 4y ago
but do you automatically get access to the insured part, or do you have to sit around and wait for a few months until FDIC hashes it out with whoever? it could be really a matter of life and death for some startups. Update: yes, seems like the insurance part is pretty quick https://twitter.com/MMikeMMa/status/1634245929481175040/photo/1 https://twitter.com/MMikeMMa/status/1634245929481175040/phot...

bombcar 4y ago

The IOUs that FDIC hands out can be borrowed against, or sold. There will be a lot of people active this week trying to buy them at favorable rates