Burn Rate Calculator — Gross and Net Monthly Cash Burn

Background.

Ask a founder what the company burns and you will usually hear one number. There are two. Gross burn is all the cash that leaves the bank in a month: payroll, rent, cloud bills, advertising, contractors, the new laptops. Net burn is what remains of that after customers have paid, and it is the amount by which the balance actually falls. A quarter with $900,000 of cash operating costs, $30,000 of equipment and $450,000 collected from customers works out at $310,000 a month gross and $160,000 a month net.

Andreessen Horowitz's "16 Startup Metrics" draws the same line: gross burn "only looks at your monthly expenses + any other cash outlays", while net burn is "the true measure of amount of cash your company is burning every month". The two answer different questions. Net burn is what a runway calculation divides into. Gross burn is the exposure, the monthly loss you would face if collections dried up. A company burning $160,000 net on $310,000 gross relies on customers to pay for nearly half its outflows; one burning $160,000 with no revenue at all does not, even though the net figures match.

Everything here is measured in cash that moved. Depreciation, amortisation and stock-based compensation stay out because no money left the account. Equipment bought outright goes in at full price in the month it was paid for. An annual subscription paid up front counts in full when the money arrives, however the revenue is recognised. Money raised from investors or lenders is excluded, so closing a round never makes the burn look smaller.

One convention to note before reading the result: a16z writes net burn as revenue minus gross burn, which comes out negative while a company is burning. Boards and operators say "we burn $160k a month", so the result here is gross burn minus collections, positive while cash is being consumed, with a status line that says in words which side of zero you are on. How long the money lasts needs a cash balance, which the runway calculator takes, and whether the spending is buying growth needs a different ratio altogether.

What is burn rate calculator?

Burn rate is the rate at which a company's cash falls, conventionally stated per month. a16z's definition is the plainest one available: "the rate at which cash is decreasing." Gross burn per month is total cash outflows over a period divided by the months in it; net burn subtracts the cash collected from customers before dividing.

It is a cash-flow measure, not an accounting one. No standard-setter defines it and it appears in neither GAAP nor IFRS, which is why the SEC's January 2020 guidance on key performance indicators, Release No. 33-10751, expects a company that reports a metric like burn to explain how it is calculated and to flag any change in method. Two companies can both say "we burn $200,000 a month" and mean different things, depending on whether capital expenditure, debt service or expected-but-unpaid receipts are in the figure.

That last point is a real difference between sources. a16z's net-burn formula takes revenue "including all incoming cash you have a high probability of receiving". This calculator is stricter: only cash actually collected during the period counts, so an overdue invoice does nothing for the burn until it is paid.

How to use this calculator.

1. 01Choose a period and enter its length in months. A quarter is the usual choice, because annual insurance, quarterly tax payments and one-off purchases make single months jumpy; avoid a window that straddles a layoff or a big launch.
2. 02Under cash operating costs, enter what operations actually paid out: payroll and payroll taxes, rent, hosting, software, advertising, contractors, travel. Work from the bank statement or cash-flow statement rather than the income statement, and leave out depreciation, amortisation and stock-based compensation.
3. 03Enter capital expenditure separately: servers, laptops, office fit-out, capitalised software development. Keeping it apart lets you see how much of a quarter's burn was one-off equipment.
4. 04Put debt principal and interest, tax settlements, legal settlements and similar payments under other cash outflows. Money raised from equity, loans or grants goes nowhere in the form.
5. 05Enter cash collected from customers: deposits that cleared during the period, not billings, bookings or recognised revenue.
6. 06Read net burn per month first, then gross burn and the coverage percentage, and take net burn to the runway calculator together with your cash balance.

The formula.

Gross burn for the period is the sum of the three outflow fields, G = OpCash + CapEx + Other. Net burn for the period subtracts collections, N = G − Collected. Each is divided by the number of months n to give a monthly rate, and collections are divided the same way to give the average cash collected per month. Cash coverage is Collected ÷ G × 100, the share of gross outflows that customer payments met.

Because the monthly figures are period totals divided by n, they are straight averages. A quarter made of one $300,000 month and two $150,000 months reports the same $200,000 a month as three even months would. That smoothing is the reason to use a longer period, and also its limit, since a trend inside the window disappears into the average.

The sign follows the operator convention. A positive net burn means cash is being consumed, zero means collections exactly matched outflows, and a negative figure means the period was cash generative; the status line then states the monthly surplus as a positive amount. a16z's published subtraction runs the other way, revenue minus gross burn, so the magnitudes agree and only the sign flips. Outflows are entered as positive numbers, and a period with no outflows at all has no burn rate to measure.

Money results are given to the cent and coverage to two decimal places. Close to break-even that distinction matters: $99,999.99 collected against $100,000 of gross burn displays 100.00% coverage while net burn is still $0.01 a month, positive. The signed net figure and the status line, not the percentage, tell you which side of zero the business is on.

The model takes one period at face value. It does not forecast, so a hiring plan that starts next month, a price rise or a renewal season that falls just outside the window is invisible to it; restate the figures when the business changes shape.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Jordan, J., Hariharan, A., Chen, F., & Kasireddy, P. (21 August 2015). "16 Startup Metrics." Andreessen Horowitz. Independent primary source for the gross-burn and net-burn definitions quoted on this page, and for the caution that ARR "should exclude one-time (non-recurring) fees and professional service fees". Retrieved 29 July 2026; page loads and contains the quoted definitions verbatim.
2. [2]Financial Accounting Standards Board (August 2014). Accounting Standards Update No. 2014-15, "Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." Establishes the one-year-after-issuance look-forward period for the substantial-doubt evaluation. Authoritative PDF; URL verified live 29 July 2026 (binary PDF, text cross-checked against PwC Viewpoint's ASC 205-40 chapter).
3. [3]17 CFR § 229.303(b)(1) (Regulation S-K, Item 303 — Management's Discussion and Analysis; as amended by SEC Release 33-10890). Requires liquidity and capital resources to be described "short-term (i.e., the next 12 months from the most recent fiscal period end required to be presented) and separately in the long-term (i.e., beyond the next 12 months)". Text verified 29 July 2026 via the Cornell LII mirror of the eCFR; sec.gov returns HTTP 403 to automated fetchers but is browser-accessible.
4. [4]Sacks, D. (23 April 2020). "The Burn Multiple." Craft Ventures. Source for Burn Multiple = Net Burn ÷ Net New ARR and its benchmark bands. Independent of a16z; consulted specifically to cross-check the net-burn definition. Retrieved 29 July 2026.
5. [5]Graham, P. (October 2015). "Default Alive or Default Dead?" Source for the default-alive framing — whether current growth reaches profitability before the cash runs out. Retrieved 29 July 2026.
6. [6]U.S. Securities and Exchange Commission (30 January 2020). Release No. 33-10751, "Commission Guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations" — guidance on disclosing key performance indicators and metrics, including the definition and method of calculation. Effective 25 February 2020. sec.gov blocks automated fetchers (HTTP 403); citation verified against the SEC's published release number, title and dates.