Burn Rate Calculator

Gross burn vs net burn: what each one tells you

Gross burn is total monthly cash outflow: payroll, rent, software, cloud, contractors, taxes, everything that leaves the bank. It answers a downside question: if revenue went to zero, how fast would cash disappear? Net burnsubtracts cash inflows (collections, not invoiced revenue) from outflows, so it measures how fast the bank balance actually falls. Net burn drives runway math, board conversations, and fundraise timing. Both are cash measures, which is why this calculator asks for cash inflows and outflows rather than P&L revenue and expenses; accrual accounting can make a company look healthier or sicker than its bank account really is. The burn rate glossary entry covers the definitions in more depth.

Burn multiple: the efficiency check investors run

Burn multiple divides net burn by net-new ARR for the same period: how many dollars of cash you spend to add one dollar of recurring revenue. Burn $40K in a month while adding $25K of net-new ARR and your burn multiple is 1.6x. Investors check it because absolute burn is meaningless without context; a company burning $500K a month while adding $600K of ARR is more fundable than one burning $100K to add $20K. A rising burn multiple is often the earliest signal that go-to-market efficiency is decaying, showing up quarters before growth visibly slows.

What healthy looks like by stage

At Series A, under 1x is elite, 1x to 1.5x is good, 1.5x to 2x is acceptable, and anything over 2x draws hard questions. Seed companies get more slack because a small ARR base makes the ratio noisy; a seed-stage burn multiple of 2x to 3x can still be fine if it is trending down. By Series B and beyond, the expectation tightens toward 1x or below as the sales motion proves repeatable. Our burn multiple benchmarks by stage article breaks the bands down with 2026 data.

Burn rate is one snapshot; managing it is a cadence. Use the runway calculator to project the same numbers over 24 months and see when you would need to raise, and use a 13-week cash forecast template to manage the near-term view week by week, where payroll dates and slow-paying customers actually bite. Together the three views (monthly burn, weekly cash, multi-month runway) are the core of startup cash management.

One practical habit: recompute burn from actual bank activity in the first week of every month, not from the accounting close. Payroll timing, annual prepayments, and one-time items make any single month noisy, so track a three-month rolling average alongside the point number before reacting to a spike.