Burn rate is the speed at which a startup spends its cash reserves, typically measured monthly. Gross burn is total monthly spending; net burn is spending minus revenue. Formula: Net Burn = Monthly Expenses - Monthly Revenue. Runway = Cash / Net Burn Rate. For example, if you spend $100K/month and earn $30K, your net burn is $70K. With $700K in the bank, you have 10 months of runway. Healthy early-stage burn rates depend on stage: pre-seed ($20-50K/month), seed ($50-150K/month), Series A ($150-500K/month). Always aim for 18+ months runway and reduce burn before it's too late.
Key Burn Rate Takeaways
- Gross burn = total monthly spending
- Net burn = spending minus revenue
- Runway = Cash ÷ Net Burn Rate
- Pre-seed: $20-50K/month typical
- Seed: $50-150K/month typical
- Series A: $150-500K/month typical
- Aim for 18+ months runway
- Reduce burn before it's critical
- Track weekly in early stages
- Revenue reduces net burn
Burn Rate Statistics
$20-50K
pre-seed monthly burn
$50-150K
seed monthly burn
$150-500K
Series A monthly burn
18+ mo
ideal runway
Expert Tips
Track net burn, not just gross
Revenue offsets expenses - focus on the real number
Build in buffer
Actual burn is often 20-30% higher than projected
Reduce before fundraising
Lower burn = longer runway = better negotiating position
Know your 'default alive' number
What burn rate makes you profitable before cash runs out?
Recommended Tools & Resources
QuickBooks
Expense tracking and burn rate monitoring