Burn Rate Calculator
Burn rate measures how quickly a startup or early-stage company spends its cash reserves. Understanding burn rate is essential for founders, CFOs, and investors because it determines how long the business can operate before needing additional funding. Gross burn rate captures all monthly cash outflows regardless of revenue. Net burn rate subtracts monthly revenue from those outflows to show the true pace of cash depletion. This calculator takes your beginning cash balance, ending cash balance, and monthly revenue to compute both metrics and your remaining runway in months. Keeping burn rate in check relative to runway is one of the most important financial disciplines in venture-backed and bootstrapped businesses alike.
Burn rate formulas
Gross Burn = Beginning Cash - Ending Cash
Net Burn = Gross Burn - Monthly Revenue
Runway (months) = Current Cash / Net Burn
A negative net burn means the company is cash-flow positive. Runway is calculated using net burn because that reflects actual cash depletion pace.
How to interpret your burn rate
- A gross burn of $70,000/month with $20,000 revenue gives a net burn of $50,000/month.
- With $600,000 in the bank, that yields 12 months of runway.
- Most VCs want to see 18+ months of runway after a funding round.
- Burn rate should be reviewed monthly and updated after each significant hiring or contract event.
Burn rate: frequently asked questions
What is burn rate?
Burn rate is the speed at which a company spends its cash reserves. Gross burn rate is total monthly cash outflows. Net burn rate subtracts monthly revenue from outflows to show the true cash depletion rate.
What is the difference between gross and net burn rate?
Gross burn rate is all monthly spending before revenue. Net burn rate is monthly spending minus monthly revenue. Investors focus on net burn rate because it shows how quickly equity cash is being consumed.
How do I calculate burn rate from bank statements?
Subtract your ending cash balance from your beginning cash balance for the same month. That difference is your net burn. Add back any revenue received during that period to get gross burn.
What is a healthy burn rate for a startup?
There is no universal answer. A healthy burn rate depends on stage, sector, and fundraising timeline. Most investors expect startups to have at least 12 to 18 months of runway at any given time.
How often should I recalculate my burn rate?
Monthly is best practice. Cash positions change with hiring, contracts, and seasonality. Reviewing burn monthly lets you adjust spending before you reach a critical runway threshold.
Sources
- U.S. Small Business Administration: Manage Your Finances.
- U.S. Securities and Exchange Commission: EDGAR Company Filings.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.