Capex (capital expenditure) is investment in long-term assets — equipment, infrastructure, buildings — capitalized on the balance sheet and depreciated over useful life.

How it works

Accounting treats capex differently from opex (operating expenditure) like payroll and rent. Spend $2 million on factory machines → capex asset depreciated over years. Spend $2 million on sales salaries → opex hits the P&L immediately.

In startups, capex appears in:

• Hardware and robotics companies buying production gear
• Data centers and climate projects building physical plants
• SaaS businesses capitalizing internal-use software development (under certain rules)

Cash flow statements show capex as investing outflows. Investors adjust burn rate analysis when capex drives growth — recurring opex burn may be low while cash capex drains the account.

Software capitalization rules vary by accounting policy — some engineering costs hit opex under GAAP while still feeling like investment to operators. Align with your CFO on definitions before reporting metrics to the board.

Investors in hardware-adjacent startups often ask for capex per unit deployed — tying capital intensity directly to customer revenue milestones.

Why it matters

• Founders: Separate capex plan from operating budget in board decks. Lenders may finance asset-heavy capex; pure VC may prefer asset-light models.
• Investors: Capex-heavy models need longer horizons, project finance, or PE-style returns. Misclassifying capex as opex distorts unit economics.

Common mistake

Ignoring maintenance capex — replacement equipment needed to sustain output — and modeling only growth capex. Both consume cash and belong in board-level capital planning.

Related ideas

See also capex heavy, opex, depreciation, cash flow, and project finance.