Burn Rate

Burn rate is typically used to describe the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations. It is a measure of negative cash flow.

Gross Burn is the total amount of operating expenses. Net Burn is the total amount of money a company loses each month (Expenses - Revenue).

Understanding burn rate is critical for calculating the "runway"—the amount of time the company has before it runs out of money.