Answer

What is burn rate?

Updated August 2026. Evergreen page — refreshed in place as facts change.

Two numbers govern every startup conversation that matters — how much you have, and how fast it's leaving. Everything else in startup finance is commentary on that division problem.

Gross vs net, and which to watch

Gross burn is everything out the door monthly — payroll, rent, infrastructure, contractors. Net burn subtracts collected revenue. A company spending $150K and collecting $90K has $150K gross, $60K net burn — and net is the survival metric, because it's what actually drains the account.

Watch the composition too: burn concentrated in experiments you can stop is very different from burn locked into leases and salaries. The best operators know their 'reducible within 60 days' number cold.

Runway: the only formula

Runway (months) = cash ÷ net burn. The honest version uses projected net burn, not last month's: hiring plans, ramping contracts, and seasonality all bend the curve. Re-run it monthly with the board-level assumption set, and treat any answer under twelve months as a flashing light — fundraises consume a quarter or more, and you want to raise from evidence, not from need.

Paul Graham's 2015 formulation remains the cleanest lens: is the company default alive (reaches profitability on current trajectory before cash runs out) or default dead? Knowing which you are changes every decision downstream.

When to cut, and how founders get it wrong

The pattern that kills companies isn't high burn — it's high burn with low information. Spending aggressively against a working, measured growth motion is what the money is for; spending aggressively while 'figuring it out' is a countdown. The classic error is cutting late: teams shave 10% when the math demanded 40%, then make the real cut anyway with three months less runway.

The operational corollary: cash discipline is mostly plumbing. Consolidated accounts, visible balances, approval flows on spend, and no money leaking through forgotten subscriptions or expensive transfer rails — boring controls that quietly buy weeks.

Burn in a multi-currency, multi-rail company

Modern startups burn across borders — international contractor payouts, global vendors, sometimes stablecoin payments alongside bank rails. The runway math is unchanged, but the plumbing matters more: every payment rail with fees and float is a small tax on burn, and treasury balances scattered across platforms are runway you can't see. Consolidating visibility — dollars and digital assets in one entity-titled picture — keeps the denominator honest.