Question 1

What is the difference between gross burn and net burn?

Accepted Answer

Gross burn is total monthly cash outflow, including all salaries, rent, infrastructure, and other expenses. Net burn is gross burn minus cash inflow (primarily revenue). A company spending $200k/month (gross burn) with $120k/month in revenue has $80k net burn. Investors focus on net burn when evaluating runway.

Question 2

What is a normal burn rate for a startup?

Accepted Answer

Burn rate varies widely by stage and team size. Pre-seed: $20-50k/month. Seed: $50-150k/month. Series A: $150-400k/month. The right burn rate depends on milestones you need to hit and the runway your funding provides. Burning faster is acceptable when unit economics are strong and you are investing in proven growth channels.

Question 3

How do I reduce burn rate?

Accepted Answer

The biggest cost is usually people. Re-evaluate hiring plans, prioritize roles that directly drive revenue or product. Negotiate annual contracts for infrastructure. Eliminate unused software subscriptions. Consider remote-first to reduce office costs. Cut marketing spend on unproven channels.

Burn rate

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