The Net Burn Rate Calculator measures the actual amount of cash your startup is losing each month after accounting for all incoming revenue. It is one of the foundational metrics monitored by venture capital investors to determine financial health and capital efficiency.
Mathematical Formula
Calculations follow the standard venture capital formula:
Net Burn Rate = Total Monthly Expenses - Total Monthly Revenue
- Total Monthly Expenses (Gross Burn): Payroll, cloud servers, office rent, software licenses, and customer acquisition campaigns.
- Total Monthly Revenue: Actual incoming cash collected from subscription billing, sales contracts, or marketplace fees.
Real-World Example
If a startup incurs $50,000 in monthly operational expenses and generates $15,000 in monthly revenue, its Net Burn Rate is $50,000 - $15,000 = $35,000 / month.
How to Use
- Enter your total monthly cash outflows in the expenses field.
- Enter your total collected monthly revenue.
- View real-time gross burn, net burn, and net cash flow trajectory.
Frequently Asked Questions (FAQ)
What is the difference between Gross Burn and Net Burn?
Gross Burn is total monthly spending regardless of income. Net Burn is total spending minus revenue, revealing the true monthly cash deficit.
What happens if Net Burn is zero or negative?
A zero or negative net burn means the company is cash-flow positive (profitable) and no longer reliant on external venture capital to survive.