AI Burn Rate Calculator
Understanding Your Cash Consumption
For startups and growth-stage companies, burn rate is one of the most watched metrics by founders and investors alike. Our AI calculator provides a comprehensive burn analysis that goes beyond simple math — breaking down expenses by category, comparing your spending against stage-appropriate benchmarks, and highlighting areas where your burn may be higher than typical for companies at your stage.
From Burn Rate to Strategic Cash Management
Managing burn rate is about making strategic trade-offs between growth investment and capital preservation. Our calculator helps you model different spending scenarios, understand how revenue growth affects net burn, and determine when to accelerate or cut spending. Whether you are preparing for a fundraise or aiming for profitability, clear burn rate analysis is essential for making confident cash management decisions.
Frequently Asked Questions
What is burn rate?
Burn rate is the rate at which a company spends its cash reserves. Gross burn rate is your total monthly spending. Net burn rate subtracts revenue from expenses, showing the actual cash decrease each month. For example, if you spend $100,000/month and earn $40,000, your gross burn is $100,000 and net burn is $60,000. Net burn is more useful for runway calculations since it reflects actual cash consumption.
What is the difference between gross and net burn rate?
Gross burn rate is your total monthly expenses regardless of revenue — it tells you the full cost of running your business. Net burn rate is expenses minus revenue — it tells you how much cash you actually lose each month. Pre-revenue startups have identical gross and net burn. As revenue grows, net burn decreases. When net burn reaches zero, the company is cash-flow neutral and no longer consuming reserves.
How do I calculate my runway?
Runway equals your current cash reserves divided by your net burn rate. With $500,000 in the bank and $50,000 monthly net burn, you have 10 months of runway. However, this assumes constant burn and revenue. Our calculator can model increasing revenue scenarios or planned expense changes to give a more realistic runway projection. Most VCs recommend maintaining at least 12-18 months of runway.
What is a healthy burn rate for a startup?
There is no universal healthy burn rate — it depends on your stage, funding, and growth rate. Pre-seed startups typically burn $20,000-$50,000/month, seed-stage $50,000-$150,000, and Series A $150,000-$500,000. The key metric is burn relative to growth: high burn with rapid growth signals investment in scaling, while high burn with flat growth signals inefficiency. Aim for 18+ months of runway.
How can I reduce my burn rate?
Common strategies include renegotiating vendor contracts, delaying non-critical hires, shifting to more affordable infrastructure, reducing marketing spend on low-ROI channels, and renegotiating office leases. Focus cuts on areas that do not directly impact revenue growth. Our calculator identifies which expense categories consume the largest share of your burn, helping you target reductions where they will have the most impact.
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