Also called: Burn, Cash burn
TL;DR
The rate at which a company spends cash, typically reported monthly. Reported as either gross burn or net burn.
Burn rate measures monthly cash consumption. Gross burn is total monthly cash outflow; net burn subtracts cash inflow (revenue, financing). Net burn is the more cash-strategic metric, it's what determines runway given the current cash balance.
Burn rate is meaningful only relative to cash on hand and burn multiple. A $1M monthly burn is exceptional for a $5M ARR company and dangerous for a $500K ARR company. Investors look at burn rate, runway, and burn multiple together.
Burn Rate = (Cash at Start − Cash at End) ÷ Months in Period
Trailing-3-month burn smooths out lumpy cash items (annual prepayments, one-time vendor bills).
Cash dropped from $4.2M (March 31) to $3.0M (June 30), 3 months. Burn rate = $1.2M ÷ 3 = $400k/mo. Combined with $4.5M cash today, runway = $4.5M ÷ $400k = 11.3 months.
Burn shows up on the Financials slide and drives the Use of Funds discussion.
Burn Rate shows up most often in these scoring rubrics and investor profiles, jump straight to who cares about it and how to pitch them.
Monthly cash outflow minus cash inflow, the actual rate at which the cash balance is depleted.
Total monthly operating cash outflow before subtracting any revenue or financing inflow.
The number of months the current cash balance will last at the current net burn rate before the company runs out of money.
Net new ARR divided by net burn, the dollars of capital consumed per dollar of new ARR generated.
A SaaS health benchmark: revenue growth rate plus profit margin should sum to at least 40%.
Long-form deep dives on the slides Burn Rate most often shows up on.
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