Metrics & Performance
Gross Burn
The total amount of cash a company spends each month across all operating expenses, before any revenue is subtracted.
Gross burn is the total monthly cash outflow of a business — all operating expenses including salaries, rent, software, marketing, COGS, and overhead — before accounting for any revenue coming in. It represents the raw total cost of running the company each month.
Gross burn is distinct from net burn, which subtracts revenue from total expenses to show how much cash the company is actually losing per month. Both metrics matter: gross burn shows the total cost base, while net burn shows the actual cash depletion rate.
For pre-revenue or early-revenue companies, gross burn and net burn are close to identical. As revenue grows, net burn decreases while gross burn might stay flat or increase — which is the desired direction.
In Practice
A startup has $500K in monthly expenses: $350K payroll, $75K AWS/infrastructure, $50K marketing, $25K rent and overhead. Its gross burn is $500K/month. It generates $200K in monthly revenue. Its net burn is $300K/month. Runway = cash / net burn.
Why It Matters
Investors and founders track gross burn to understand the true cost structure of the business and to stress-test scenarios. If revenue disappears, gross burn equals the rate of cash consumption. Understanding gross burn vs. net burn is essential for accurate runway calculations and fundraising timing.