Gross Burn

TL;DR

Total monthly operating cash outflow before subtracting any revenue or financing inflow.

Gross burn is the total amount the company spends each month on payroll, software, marketing, hosting, rent, and everything else. Unlike net burn, it doesn't credit revenue. Gross burn captures the company's true cost base — useful for stress-testing what happens if revenue drops materially.

In worst-case planning, the difference between net and gross burn matters: if revenue suddenly halves, the company would burn at close to gross-burn rate.

Formula

Gross Burn = Total Cash Operating Expenses

• Cash Operating Expenses — All cash spend: payroll, vendors, hosting, rent, software (excludes financing-cost cash)

Gross burn equals net burn when there is no revenue; it's the worst-case runway calculation if revenue collapsed tomorrow.

Worked example

Monthly gross burn $720k — if revenue went to zero tomorrow, the company would burn $720k/mo against $4.5M cash → 6.3 months survival. The same company's net burn of $410k → 11 months survival at current revenue.

Common pitfalls

• Reporting gross burn without net burn and overstating the cash problem.
• Letting gross burn rise faster than the team can absorb.
• Underestimating gross burn during seasonal revenue lulls.

When this shows up in a pitch deck

Gross burn shows up in stress-test models and worst-case scenarios in diligence.

Related terms

• Net Burn — Monthly cash outflow minus cash inflow — the actual rate at which the cash balance is depleted.
• Burn Rate — The rate at which a company spends cash, typically reported monthly. Reported as either gross burn or net burn.
• Runway — The number of months the current cash balance will last at the current net burn rate before the company runs out of money.
• Burn Multiple — Net new ARR divided by net burn — the dollars of capital consumed per dollar of new ARR generated.
• Rule of 40 — A SaaS health benchmark: revenue growth rate plus profit margin should sum to at least 40%.

Use this in your next pitch deck

Deckmetric scores your pitch across 10 VC frameworks and against 8 investor types. Upload your deck for an instant analysis, or check the startup valuation calculator to benchmark your raise.