How to Calculate Burn Rate: Formula, Examples, and What VCs Look For
Burn rate tells you how fast your startup is spending cash. Learn the exact formula, see a worked example, and find out what VCs expect at every stage.
Quick Answer
Burn rate tells you how fast your startup is spending cash. Learn the exact formula, see a worked example, and find out what VCs expect at every stage.
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?
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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.
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Form D Radar
See who just filed to raise a fund
A monthly brief built on our warehouse of SEC Form D filings — new pooled-fund filings, fund sizes, and momentum by strategy. The raw signal on the emerging-manager market, before it shows up anywhere else.
- New VC and PE fund filings, every month
- Fund-size distribution and quarter-over-quarter trends
- Built from SEC EDGAR primary sources — no scraped guesses
Delivered by email, plus The VC Beast Brief weekly. No spam. Unsubscribe anytime.
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