Again when Silicon Valley Financial institution was nonetheless pitching a package deal of monetary strikes to its clients, it famous in a presentation to its personal buyers that “elevated consumer money burn” was “pressuring [its] steadiness of fund flows.”

The beforehand central financial institution to Silicon Valley informed the inventory market that whereas it had anticipated a “modest, progressive” decline in startup money consumption as enterprise {dollars} slowed, burn had “not moderated” within the first quarter of 2023. This harm its deposit base, which in flip was a precipitating issue within the run that later smashed the financial institution.

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Studying by the financial institution’s notes earlier than it failed a number of dozen hours later, this column pulled out the burn statistic as probably the most fascinating nugget from SVB’s asset sale and debt shakeup. Whoops.

No matter our incapability to notice an incipient financial institution run, the dataset fashioned an fascinating conclusion in our minds: Startups have been failing, not less than in america, to really scale back their burn charges.

New information paints a barely extra nuanced image. Thanks to Brex data shared with SaaSletter, we will get a bit extra granular. It seems than if you evaluate later-stage startup spending cuts with their earlier friends, the larger startup are doing a greater job.

The query, then, is whether or not that is sensible. Let’s discover.

Lower spend, lower burn

Recall that within the first quarter we noticed late-stage round sizes and valuations fall sharply. Capital flowing into bigger, extra richly valued startups is in retreat, and unicorns are currently wedged between a rock (falling enterprise capital funding), a tough place (a totally useless IPO market and sluggish M&A exercise for corporations of their dimension), and a rocky onerous place (the truth that many late-stage startups are carrying paper valuations that won’t convert into new funding at par).