Burn Rate

What is Burn Rate?

Burn Rate is the speed at which a company spends its cash reserves to cover operating expenses before generating positive cash flow. It is typically expressed as a monthly figure and is a vital metric for startups and venture-backed businesses.

Why It Matters

• It determines the company’s runway and how much time remains before additional funding or profitability is required.

• Monitoring burn rate helps leadership make informed decisions about hiring, marketing spend, and capital expenditures.

• Investors use this metric to assess the financial health and capital efficiency of a business.