Burn Rate Calculator
Calculate your startup's burn rate, cash runway, and burn multiple instantly. See how cost reductions and revenue growth extend your runway with interactive scenario modeling.
How It Works
1
Enter Your Financials
Input your monthly revenue, expenses, cash on hand, and expected growth rate
2
Calculate Burn Metrics
Instantly see your net burn rate, cash runway, and burn multiple (Bessemer framework)
3
Explore Scenarios
See how cost cuts and revenue growth extend your runway with interactive charts
Financial Inputs
Enter your current monthly financials
Monthly Revenue ($)
Monthly Expenses ($)
Cash on Hand ($)
Key Results
Your burn rate and runway metrics
Gross Burn Rate
$80,000/moNet Burn Rate
$30,000/moCash Runway
17 monthsBurn Multiple
12.0xKey Insights
Gross burn is total monthly spend. Net burn subtracts revenue — it's what actually drains your bank account.
Burn multiple below 2x signals efficient growth. Above 4x means you're spending too much per dollar of new ARR.
Most VCs expect 18-24 months of runway after a raise. If you're below 12 months, start fundraising now.
Non-dilutive funding like revenue-based financing can extend runway without giving up equity.
Cash Balance Over 24 Months
Compare scenarios to see how changes extend your runway
Scenario Comparison
How different strategies extend your runway
With Revenue Growth (5%/mo)
Growing revenue extends runway20% Cost Reduction
Cut expenses to $64,000/moCurrent Burn Rate
$30,000/mo net burnImpact of 20% cost cut: +19 months runway
What Is Burn Rate?
Burn rate measures how quickly a startup spends its cash reserves. It's one of the most critical SaaS KPIs for founders and investors because it determines how long a company can operate before needing additional funding.
There are two types of burn rate that every founder should track:
Gross burn rate is your total monthly operating expenses — payroll, rent, infrastructure, marketing, and everything else you spend. It tells you the total cost of running your business regardless of revenue.
Net burn rate is your gross burn minus revenue. This is the number that actually matters for runway calculations because it represents how much cash you lose each month.
Burn Rate Formula
Gross Burn Rate = Total Monthly Operating Expenses
Net Burn Rate = Monthly Expenses - Monthly Revenue
For example, if your startup spends $80,000 per month and generates $50,000 in revenue, your gross burn rate is $80,000 and your net burn rate is $30,000. This means you're losing $30,000 in cash each month.
Cash Runway Formula
Cash Runway (months) = Cash on Hand / Net Burn Rate
Using the example above, with $500,000 in the bank and a $30,000 net burn rate, your runway is approximately 16.7 months. Most VCs and experienced founders recommend maintaining at least 18-24 months of runway, especially after a fundraise.
If your runway drops below 12 months, it's time to either cut costs, accelerate revenue, or start fundraising. Options like revenue-based financing can extend your runway without dilution while you focus on growth.
What Is Burn Multiple?
Burn multiple, popularized by Bessemer Venture Partners, measures how efficiently you're converting cash into growth. It answers the question: "How much are you burning for each dollar of new ARR?"
Burn Multiple = Net Burn / Net New ARR
Burn Multiple | Rating | What It Means |
|---|---|---|
Below 1x | Amazing | Generating more ARR than you burn — extremely capital efficient |
1x - 2x | Good | Healthy growth efficiency, attractive to investors |
2x - 4x | Needs Work | Common for early-stage but needs improvement to sustain |
Above 4x | Unsustainable | Spending too much per dollar of growth — requires action |
Burn Rate Benchmarks by Stage
What counts as a "good" burn rate depends heavily on your stage and growth rate. Here are typical benchmarks:
Stage | Typical Net Burn | Target Runway | Burn Multiple |
|---|---|---|---|
Pre-Seed / Seed | $20K-$50K/mo | 18-24 months | 3x-5x (acceptable) |
Series A | $100K-$300K/mo | 18-24 months | 1.5x-3x (good) |
Series B+ | $500K-$1M+/mo | 24+ months | Below 2x (expected) |
How to Reduce Your Burn Rate
If your runway is shorter than you'd like, here are five proven strategies to reduce burn:
1. Audit your tech stack. Most SaaS companies overspend on tools by 20-30%. Cancel unused subscriptions, consolidate overlapping tools, and renegotiate annual contracts.
2. Optimize headcount allocation. Hiring is the largest expense for most startups. Consider whether each role directly contributes to revenue or product-market fit. Delay non-critical hires.
3. Right-size your infrastructure. Cloud costs often scale faster than revenue. Use reserved instances, auto-scaling, and regular cost optimization reviews.
4. Accelerate revenue. Sometimes the best way to reduce net burn is to grow revenue faster. Focus on upselling existing customers, reducing churn, and shortening sales cycles.
5. Consider non-dilutive funding. Instead of cutting to the bone, non-dilutive funding options like SaaS financing or bootstrapping strategies can extend your runway while you optimize unit economics.
Running low on runway?
Extend your runway without giving up equity.
Founderpath provides non-dilutive capital to SaaS companies based on their recurring revenue. Access funding in days, not months — and keep 100% of your company.
Revenue-based financing lets you access capital based on your recurring revenue. No equity given up, no board seats lost. Keep full ownership while extending your runway.
Traditional fundraising takes 3-6 months. With Founderpath, SaaS companies can access non-dilutive capital in as little as 24 hours based on their MRR.
Repayments adjust with your revenue. If you have a slow month, you pay less. No fixed monthly payments that drain your runway during tough periods.
Unlike traditional bank loans or MCAs, revenue-based financing through Founderpath doesn't require personal guarantees or collateral beyond your SaaS metrics.
Beyond funding, Founderpath helps you monitor burn rate, runway, MRR growth, and other critical SaaS metrics to make data-driven financial decisions.
Frequently Asked Questions
- Gross burn rate: Total monthly operating expenses (payroll, rent, tools, marketing, etc.)
- Net burn rate: Monthly expenses minus monthly revenue — the actual cash you lose each month
Net Burn Rate = Monthly Expenses - Monthly Revenue
For example, if you spend $80,000/month and earn $50,000/month in revenue, your net burn rate is $30,000/month. This means you're losing $30,000 in cash each month.
If your revenue exceeds expenses, congratulations — you're cash-flow positive and your net burn is negative (meaning you're adding cash, not losing it).
Burn Multiple = Net Burn / Net New ARR
Benchmarks:
- Below 1x: Amazing — you're generating more ARR than you burn
- 1x - 2x: Good — healthy growth efficiency, attractive to investors
- 2x - 4x: Needs improvement — common for early-stage but not sustainable
- Above 4x: Unsustainable — spending too much per dollar of new revenue
- 18-24 months after a fundraise — this gives you time to hit milestones for your next round
- 12+ months minimum — below this, you should be actively fundraising or cutting costs
- 6 months or less — this is a critical situation requiring immediate action
Net burn rate subtracts your revenue from gross burn. It represents the actual cash you're losing each month.
Example: A company spending $100,000/month (gross burn) with $60,000/month in revenue has a net burn of $40,000/month. The gross burn tells you what it costs to run the business; the net burn tells you how fast your bank account is shrinking.
For runway calculations, always use net burn rate.
- Audit your tech stack: Most companies overspend on SaaS tools by 20-30%. Cancel unused subscriptions.
- Optimize headcount: Delay non-critical hires and ensure every role ties to revenue or product-market fit.
- Right-size infrastructure: Use reserved instances, auto-scaling, and regular cloud cost reviews.
- Accelerate revenue: Upsell existing customers, reduce churn, and shorten sales cycles.
- Consider non-dilutive funding: Revenue-based financing can extend runway without giving up equity.
Cash Runway = Cash on Hand / Net Burn Rate
For example, with $500,000 in the bank and a $30,000/month net burn rate, your runway is approximately 16.7 months.
This is a simplified calculation assuming constant burn. In reality, your burn rate may change as you grow revenue or adjust spending — which is why the scenario comparison in our calculator is so useful.
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