Glossary · Metrics · Updated
Burn rate is how fast a startup consumes its cash, expressed in euros per month. Gross burn is total spending; net burn subtracts receipts. Net burn is the figure that determines runway.
Burn rate is the most closely watched metric at any unprofitable company, because it drives everything else: when you next raise, whether you can hire, and how much room you have in a negotiation. An investor asking for your burn is really asking how much time you have left.
Confusing gross and net burn distorts a lot of conversations. A company spending €80K a month and collecting €30K sometimes reports "€80K of burn", halving its apparent runway. Conversely, forgetting that receipts are seasonal overstates runway at the worst possible moment.
Burn should be computed forward, not from last month's bank statement. A signed employment contract, a rent increase or the end of a tax credit change the number before they ever appear in the accounts. Teams that manage cash well keep a rolling twelve-month plan, revised monthly.
Example: computing burn and the cost of one hire
A post-seed startup with a team of six and early recurring revenue.
| Payroll | €55,000/month |
|---|---|
| Other costs (office, tools, marketing) | €25,000/month |
| Gross burn | €80,000/month |
| Customer receipts | €30,000/month |
| Net burn | €50,000/month |
| Cash available | €600,000 |
| Runway | €600,000 / €50,000 = 12 months |
| Hiring someone at €55K gross salary | roughly €6,500/month fully loaded |
| New net burn | €56,500/month |
| New runway | about 10.6 months |
One hire costs 1.4 months of runway here. That is the conversion to run before signing: a role is not measured in euros per year but in weeks of cash.
The common mistake
Reporting gross burn as if it were net, or the reverse. Both figures are legitimate, but they answer different questions, and the gap between them is exactly what an investor will check in the dataroom.
Frequently asked questions
What is the difference between gross and net burn?+
Gross burn is total cash out for the month. Net burn subtracts receipts. A company spending €80K and collecting €30K has €80K gross burn and €50K net burn. Runway is calculated off net burn.
What burn rate is acceptable?+
There is no absolute threshold: what matters is the ratio between burn and what it produces. A €100K monthly burn generating €30K of additional MRR per quarter is healthy; the same burn with no revenue or product progress is not.
Related terms
Prepare your raise with the right documents
Onefive brings the dataroom, the investor network and the startup profile into one workspace, built for European teams from pre-seed to Series A.
