What is Capital Expenditure?
Capital Expenditure
Capital Expenditure (CapEx) represents the cash spent by a startup to acquire, upgrade, and maintain physical assets like servers, office spaces, or machinery.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Capital Expenditure helps founders model equity distributions when structuring rounds for asset purchase budgeting and financial statement audits.
Detailed Deep Dive
Capital Expenditure (CapEx) represents investments in long-term physical assets. Modern software startups maintain low CapEx by utilizing cloud hosting, which is treated as operational spend.
Frequently Asked Questions
Q:How is CapEx treated on the income statement?
It is capitalized as an asset on the balance sheet and depreciated over its useful life, rather than expensed immediately.
Q:Why do SaaS startups have low CapEx?
Because they rely on cloud hosting (AWS/Azure) which is treated as operational expenditure (OpEx) rather than buying physical servers.
Quick Facts
- CategoryMetrics
- Key ApplicationAsset purchase budgeting and financial statement audits
Coverage Trend12 Weeks
Related Startup Terms
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Capital Expenditure Media Coverage & Intelligence
Microsoft's Stock Rises 9% on Strong Azure Revenue Growth and Steady Capex Spending
Microsoft Corp.'s stock was trading 9% higher in the after-hours session today after reporting four-quarter earnings and revenue that surpassed Wall Street's expectations while reiterating its capital expenditure forecast for the rest of the year.
Alphabet's Stock Sinks After It Bumps up AI Infrastructure Spending yet Again
Google parent company Alphabet Inc. delivered better-than-expected revenue for the second quarter today, thanks to strong growth in its cloud business - but the stock sank in extended trading after it missed expectations on earnings and lifted its forecast for capital expenditure.