Burn Rate

Burn rate is how fast a company spends cash, usually stated monthly. Gross burn is total cash outflow — payroll, infrastructure, tools, rent — while net burn subtracts cash coming in, so a startup spending $400K and collecting $250K a month has a net burn of $150K. Divide cash in the bank by net burn and you get runway, the number of months before the company needs revenue growth, new funding, or cuts. Burn only becomes meaningful next to progress, which is what burn multiple (net burn divided by net new ARR) captures: burning $150K to add $150K of ARR is efficient; burning it to add $20K is a warning. For AI-era SaaS there is a newer wrinkle — inference costs scale with usage, so growth can raise burn instead of lowering it, making margin-aware pricing part of burn management. Watch net burn trend, not a single month.