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In the book "Antifragility of Islamic Finance: The Risk-Sharing Alternative" by Umar Rafi and Abbas Mirakhor, on page 101 I read the following line:

"Pets.com, the poster-child company of the dot com bubble, was founded in 1998. It burned through $300 million in two years, folded in 2000; going from IPO to liquidation in 268 days."

What does technically "burned through $300 million" mean? Is there any more scientific expression for it? Was it angel investors' money, and they spent it without any profit? Or was it the value of the company at the time of the dot com bubble, and its market value lost so much in value after the outbursts of the bubble?

  • burned through = Spending up all the liquidity, including both cash and loan. The metaphor is more attractive than saying "spending other people's money lavishly and unwisely". – mootmoot Jul 4 at 16:46
  • This belongs on ell, not money – stannius Jul 7 at 19:43
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Burn rate describes the rate at which a new company spends its capital to finance overhead before generating positive cash flow (negative cash flow). So burned through means they accomplished it and ran out of money.

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    Is burn used consistently in corporate finance this way, beyond just "burn rate"? Burned through is also a colloquial expression meaning "spent all or most of the money quickly", with an implication that it was spent unwisely. – Upper_Case Jul 2 at 17:40
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    Burning money can be used colloquially as well. The money burned a hole in her pocket. My brother burned through his inheritance. He burning cash like crazy. My grandparents burned through their retirement savings. In all instances, burn refers to spending and yes, it implies unwise spending. – Bob Baerker Jul 2 at 17:58
  • I'm sorry, my question was unclear (but thank you for addressing it anyways). What I meant to ask is: are burn or burn rate still used this way with reference to corporate spending beyond spending capital financing overhead before achieving a positive cash flow, or is that a special case which adheres only to the phrase burn rate in that specific situation? – Upper_Case Jul 2 at 19:21
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This answer is in response to OP's comment (now edited into the post):

was it angel investors' money, and they spent it without any profit? Or was it the value of the company at the time of the dot com bubble, and its market value lost so much in value after the outbursts of the bubble?

You can't (directly) spend the "value of your company" (the amount people are willing to pay for a share of stock times the number of outstanding shares).

You can only spend cash.

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