Burn Rate
Definition
Burn rate is the amount of cash a company spends per month above what it earns. Gross burn is total monthly spending; net burn subtracts revenue.
How it comes up in fundraising
Burn rate determines runway: $2M in the bank with $100K monthly net burn equals 20 months of runway.
Frequently asked questions
What is a healthy burn rate?
One that leaves 18 to 24 months of runway after a raise and buys measurable progress; the ratio of burn to growth (burn multiple) matters more than the absolute number.
What is the difference between gross and net burn?
Gross burn is all cash out per month; net burn is cash out minus cash in. Investors usually mean net burn.
Round Funded resources
Related terms
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