How to Calculate Burn Rate: Formula, Examples, and What VCs Look For

Burn rate is the single number that tells you how long your startup has before the money runs out. Every founder needs to know it cold — and every VC will ask about it in the first meeting. Get it wrong and you're either running out of cash without warning or leaving your investors confused about your financial hygiene.

This guide walks through the exact formula, a step-by-step calculation, a worked example with real numbers, and the benchmarks that matter by stage.

What Is Burn Rate?

Burn rate is the net amount of cash your company spends each month after accounting for any revenue coming in. It answers a simple question: at the current pace, how many dollars are leaving the bank every 30 days?

There are two versions you need to understand:

• Gross burn rate — total cash out per month, regardless of revenue
• Net burn rate — cash out minus cash in (the number VCs actually care about)

Most investors refer to net burn rate when they ask "what's your burn?" unless otherwise specified.