29:00Kirsty Nathoo - Managing Startup Finances
From Y Combinator · Published Jul 21, 2020 · Watch on YouTube
TL;DR
Most startups die because they run out of cash, which is avoidable by regularly tracking three numbers: bank balance, money in, and money out. Founders must know their burn rate, runway, growth rate, and whether the company is default alive. Key pitfalls include not reviewing finances weekly, underestimating future expenses (e.g.
Key insights
- Burn rate is simply money in minus money out, calculated from bank statements; average burn over 3 months smooths lumpy expenses.
- Runway = bank balance ÷ average burn; this is an honest number for internal use, not for comparison or vanity.
- Growth rate = (revenue in month 2 − revenue in month 1) ÷ revenue in month 1; constant growth rate produces a J‑curve because the same percentage yields larger absolute increases as revenue grows.
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