Burn rate is the speed at which a startup spends cash. Gross burn is total monthly cash outflow. Net burn is total cash outflow minus total cash inflow from operations. Net burn is the more useful metric because it accounts for revenue and determines how quickly the company is depleting its cash reserves. Burn rate divided into cash balance gives runway.
By Pitchkit · Last Updated October 10, 2026
Burn rate, together with cash on hand, tells investors exactly how much time and flexibility you have before you run out of money. It also signals how disciplined you are about spending relative to the milestones you have actually hit.
Investors increasingly look at burn relative to growth rather than burn in isolation. Spending aggressively is fine when it is buying proven, repeatable growth. Spending the same amount with nothing to show for it is a very different story.
Gross burn is total cash out for the month, covering salaries, rent, infrastructure, tools, and everything else. Net burn equals gross burn minus cash in, primarily revenue collected in that period.
Net burn, divided into your current cash balance, gives you runway. Because net burn nets out revenue, it is the number that actually reflects how fast your cash reserves are shrinking.
Cash out for the month is $280,000. Cash in from revenue is $110,000. Net burn equals $280,000 minus $110,000, or $170,000 for the month.
Pre-seed companies commonly run $20,000 to $50,000 in monthly burn. Seed-stage companies commonly run $50,000 to $150,000. Series A companies commonly run $150,000 to $400,000. The right burn rate depends on the milestones you need to hit and the runway your funding provides, rather than on matching a peer benchmark exactly.
Burning faster is acceptable when unit economics are strong and the extra spend is going into proven, repeatable growth channels rather than untested experiments.
Treating capex or one-off financing effects as if they were normal operating burn, which distorts the trend.
Averaging several volatile months together without noting which months included one-off spikes, which makes the trend line misleading to anyone reading it later.
On your financials slide, show 6 to 12 months of net burn trend, with any major step-changes annotated, for example: Net burn $170,000 per month, stepped down after infrastructure optimizations in Q3.
Turn your metrics into a pitch narrative investors can follow.
Start Free