Burn Rate Calculator
Calculate startup burn rate and runway from monthly expenses and remaining cash. Enter values for instant results with step-by-step formulas.
Reviewed by Sahil, Senior Finance & Tax Editor
Formula
Net Burn = Expenses - Revenue | Runway = Cash / Net Burn
Net burn rate represents the actual monthly cash depletion after accounting for revenue. Runway is calculated by dividing the total available cash by the net burn rate, giving the number of months before the company runs out of money.
Worked Examples
Example 1: Early-Stage SaaS Startup
Problem:A seed-stage startup has $750,000 in the bank, earns $15,000/month in revenue, and spends $65,000/month. Calculate burn rate and runway.
Solution:Gross Burn Rate = $65,000/month\nNet Burn Rate = $65,000 - $15,000 = $50,000/month\nRunway = $750,000 / $50,000 = 15 months\nDaily Burn = $50,000 / 30 = $1,667/day\nRevenue needed to break even = $65,000/month
Result:Net Burn: $50,000/mo | Runway: 15 months | Break-even revenue: $65,000/mo
Example 2: Post-Series A Company
Problem:A Series A startup has $2,000,000 in cash, $80,000/month revenue, and $180,000/month in expenses. How long until they need more funding?
Solution:Gross Burn Rate = $180,000/month\nNet Burn Rate = $180,000 - $80,000 = $100,000/month\nRunway = $2,000,000 / $100,000 = 20 months\nAnnual Burn = $100,000 x 12 = $1,200,000/year
Result:Net Burn: $100,000/mo | Runway: 20 months | Annual Burn: $1,200,000
Frequently Asked Questions
What is burn rate and why does it matter for startups?
Burn rate measures how quickly a startup spends its available cash reserves over a given period, typically expressed as a monthly figure. Gross burn rate is total monthly spending regardless of revenue, while net burn rate subtracts any revenue earned from total expenses. This metric is critical because it determines how long a company can survive before running out of money or needing additional funding. Investors closely examine burn rate when evaluating startups because it reveals operational efficiency and financial discipline. A high burn rate relative to available cash signals urgency for fundraising or revenue growth.
What is the difference between gross burn rate and net burn rate?
Gross burn rate is the total amount of money a company spends each month on all operating expenses combined, including salaries, rent, marketing, and every other cost category. Net burn rate accounts for incoming revenue by subtracting monthly revenue from gross burn, showing the actual cash depletion per month. For example, if a startup spends $80,000 monthly but earns $30,000, the gross burn is $80,000 and the net burn is $50,000. Pre-revenue startups will have identical gross and net burn rates since there is no revenue to offset expenses. As revenue grows, net burn decreases, and when revenue exceeds expenses the company achieves profitability.
How can a startup reduce its burn rate quickly?
The fastest ways to reduce burn rate include renegotiating vendor contracts, pausing non-essential hiring, cutting discretionary spending like travel and perks, and switching to more affordable tools and services. Payroll is typically the largest expense at 60 to 80 percent of total costs, so evaluating team size and compensation structure can have the biggest impact on burn reduction. Some startups shift employees to part-time or contract arrangements during cash crunches to preserve runway without full layoffs. Subleasing unused office space, moving to remote work, and reducing marketing spend to focus only on highest-ROI channels are also common tactics that can be implemented quickly.
What is a healthy burn rate for different startup stages?
Pre-seed and seed-stage startups typically burn between $20,000 and $80,000 per month, primarily on a small founding team and basic infrastructure costs. Series A companies often burn $100,000 to $300,000 monthly as they scale their team and invest in growth channels to capture market share more aggressively. Series B and beyond can see burn rates of $500,000 to over $2 million monthly depending on the industry and growth strategy being pursued. The key metric is not the absolute burn rate but the ratio of burn to growth rate achieved with that spending. A startup burning $200,000 monthly but growing revenue 20 percent month-over-month is in a much better position than one burning $50,000 with flat revenue.
References
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy