Blog
You hear "burn rate" thrown around in startup pitches, board meetings, and Twitter threads. The term sounds technical but the concept is simple: it is how fast your company spends cash. That is it.
This guide breaks down what burn rate actually means, why it matters, and how to calculate yours in under a minute.
Burn rate is the rate at which a company depletes its cash reserves over a given time period — usually expressed as dollars per month. If you have $500,000 in the bank and you spend $50,000 a month with no revenue coming in, your burn rate is $50,000/month and you will run out of cash in 10 months.
The term comes from venture capital. Founders raise a round of funding, deposit the cash, and start "burning" it on payroll, rent, software, and ads. The faster they burn, the sooner they need to either become profitable or raise again.
Calculate your burn rate, runway, and zero date in 30 seconds.
Open Burn Rate Calculator →There are two flavors of burn rate, and confusing them is the most common mistake founders make:
| Type | Formula | Example |
|---|---|---|
| Gross burn | Total monthly expenses | $80,000/month |
| Net burn | Monthly expenses − monthly revenue | $80,000 − $30,000 = $50,000/month |
Gross burn tells you your total cost structure. Net burn tells you how fast your bank balance is actually shrinking. Investors and your CFO care about net burn because that is what determines runway. Operations teams care about gross burn because that is what they can directly cut.
Three reasons it is the most-watched startup metric:
Imagine a SaaS startup with these numbers in March 2026:
| Line item | Amount |
|---|---|
| Bank balance | $750,000 |
| Monthly payroll (5 people) | $45,000 |
| Software + tools | $3,500 |
| Office + utilities | $4,000 |
| Marketing | $8,000 |
| Other (legal, accounting, misc) | $2,500 |
| Total monthly expenses (gross burn) | $63,000 |
| Monthly recurring revenue (MRR) | $18,000 |
| Net burn | $45,000 |
| Runway | 750,000 ÷ 45,000 = 16.7 months |
This startup has 16.7 months of runway. They could comfortably raise a Series A within 9-12 months without panic. If MRR grows to $30,000, net burn drops to $33,000 and runway extends to 22.7 months — same expenses, but more revenue makes a huge difference.
Calculate your burn rate, runway, and zero date in 30 seconds.
Open Burn Rate Calculator →There is no universal answer because it depends on your stage, sector, and how much you have raised. But here are rough benchmarks investors use:
| Stage | Typical net burn | Why |
|---|---|---|
| Pre-seed | $5K-$20K/mo | Solo founder or small team, mostly software costs |
| Seed | $30K-$80K/mo | 3-7 people, finding product-market fit |
| Series A | $150K-$400K/mo | 15-30 people, scaling growth |
| Series B+ | $500K+/mo | 50+ people, multiple departments, paid acquisition |
The general rule: your burn should leave you 18+ months of runway after each raise. If you raised $5M and your burn is $400K/month, you have 12.5 months — that is on the edge.
Understanding the definition is step one. Tracking it monthly is step two. Plug your numbers in and you will know exactly where you stand in 30 seconds.