Value = 3-5x annual burn
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Value = 3-5x annual burn

Your company’s annual value creation (valuation at the end of the year minus valuation at the start of the year) should be a multiple of the cash your company has consumed during the year.


I think annual value creation should produce a 3-5x return on annual burn. That feels like a good solid range to me.


Some thoughts on burn rates by Fred Wilson


f(x)’’ > 0