What is Burn rate?

Burn rate is how much cash your company spends each month. Gross burn is total monthly spending. Net burn is spending minus the cash that comes in.

Formula

Net burn = monthly cash out − monthly cash in

Example

You spend $25,000 a month on salaries, tools and rent. Customers pay you $10,000 a month. Gross burn is $25,000. Net burn is $15,000.

Why it matters for early-stage founders

Net burn decides your runway, and investors look at it to judge how efficiently you turn money into progress. A rising burn is fine when growth rises faster. A rising burn with flat growth is a warning.

The common mistake

Counting signed contracts or invoices as cash. Burn is about cash that actually moved. Revenue that has not arrived does not extend your runway.

Know your numbers before investors ask

The free pitch deck template shows how to present your burn, runway and use of funds in one slide.

Get the pitch deck template

Go deeper

Related terms

Reviewed October 1, 2026