Burn Rate

Also known as: Cash Burn · Monthly Burn

DEFINITION

How much cash a startup loses per month. Gross burn is total cash out; net burn subtracts revenue.

In depth

Net burn is what matters for runway. Gross burn is what matters for cost control. A startup burning $200K gross and making $120K in revenue has a $80K net burn.

Investors watch two things: is the burn controlled (predictable, matching plan) and is it productive (each dollar burned moving key metrics)?

Formula & example

Net Burn = Monthly Cash Out − Monthly Cash In

EXAMPLECash out $150K/mo, revenue $50K/mo → Net Burn = $100K/mo.

Put it into practice

tool

Runway Calculator

Related terms

Runway

The number of months a startup can operate before running out of cash at the current net burn rate.

Gross Margin

The percentage of revenue left after deducting the direct cost of delivering the service (hosting, support, payment fees).

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Last reviewed 14 April 2026 by Abhi Verma.