Metrics & Performance
Burn Rate
The rate at which a company spends its cash reserves each month. Gross burn is total spend; net burn is spend minus revenue.
Burn rate measures how quickly a startup consumes its cash. Gross burn rate is total monthly cash out (salaries, rent, marketing, infrastructure). Net burn rate subtracts revenue: if a company spends $500K/month and earns $150K in revenue, net burn is $350K/month. Runway is calculated by dividing cash on hand by monthly net burn — $3.5M cash with $350K net burn = 10 months runway. Most investors want to see 18+ months of runway at any given time. Burn multiples (net burn divided by net new ARR) are used to evaluate capital efficiency — a burn multiple below 1.5x is generally considered healthy for early-stage SaaS.