Burn on its own means nothing without context. Spending $200,000 a month is reckless at $1M in the bank and routine at $20M. What matters is how many months of runway it buys, which is your cash divided by net burn. That single number decides how long you have to hit the milestone that unlocks the next raise.
The free burn rate calculator works out net burn and your runway in months.
There is no universal good burn rate, only burn measured against runway and milestones. The standard target is enough runway to reach the next funding milestone with margin to spare, which usually means 18 to 24 months after a raise. Under 6 months of runway is the danger zone, where you should already be raising or cutting.
Net burn is the figure to watch, not gross. A company with high gross burn but strong revenue can have a long runway, while a low-revenue company burns through cash faster than its spend suggests. Burn also ties to CAC payback, since slow payback means growth itself consumes cash and shortens runway.
Gross burn ignores the revenue covering part of your spend. Net burn is what actually drains the bank, so plan and report on net.
Burn is only fast or slow relative to what it buys. Spend that hits a fundable milestone is efficient burn, spend that does not is waste.
Fast growth on slow CAC payback drains cash quickest exactly when revenue looks great. Shortening payback eases burn without cutting growth.
Burn rate is how fast a company spends its cash, usually measured per month. If you hold $1.2M and spend $100,000 net a month, you are burning $100,000 and have a year of runway. It is the clock every early-stage company runs against, because when the cash hits zero the business stops.
Gross burn is your total monthly cash out with no offset. Net burn subtracts the cash coming in, so it reflects what actually leaves the bank. Net burn is the figure that matters for runway, because a company with high gross burn but strong revenue can still have a long runway while a low-revenue one burns faster than its spend implies.
Divide the cash you hold by your net monthly burn. If you have $900,000 and burn $150,000 net a month, that is 6 months of runway. Use a realistic three-month average for burn rather than your best month and remember that if cash in exceeds cash out you are cash-flow positive and not burning runway at all.
There is no good burn rate in isolation, only burn judged against runway and milestones. Most investors want to see 18 to 24 months of runway after a raise, enough to reach the milestone that justifies the next round. Under 6 months is dangerous and the right burn is whatever buys enough time to hit the next milestone with room to spare.
Runway sets your fundraising clock. Raising takes three to six months from first conversation to wired cash, so you want to start while you still hold a year or more of runway. Going into a raise with only a few months left weakens your position and lets investors sense the pressure, so manage burn to keep the raise on your terms.
If burn is climbing faster than pipeline, the fix is usually marketing efficiency, not headcount cuts. Book a 30-minute audit and we will find the lever. No sales sequence.
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