Net Burn Rate

The amount by which a company's cash falls each month, equal to cash spent minus cash received.

Example

Spending 350,000 and receiving 200,000 in a month is a net burn of 150,000.

Rising burn shortens runway quickly, even when revenue is also growing.

Cash Runway — The number of months a company can operate before running out of cash, calculated as cash divided by monthly net burn.

Runway is cash in the bank divided by what really leaves each month — Diligence recalculates burn and runway from bank statements rather than from management's summary, separating gross burn from net burn and cash held from cash promised. (10 min)
The real cost of running the company is often higher than the books show — Early companies often have below-market founder pay, unpaid invoices, deferred costs and free resources. Normalising the expense base shows what the company will actually cost to run. (10 min)
A projection is tested against the company's own history — Financial projections are most useful when compared with what the company has actually achieved and run through downside scenarios that show when cash would run out. (11 min)
Ask for a few numbers on a steady rhythm, not everything whenever you remember — Good monitoring of private positions rests on a consistent update, at a cadence matched to stage and position size, covering the handful of numbers that actually signal health. (10 min)
Cash and runway decide whether anything else gets the chance to matter — Runway - cash divided by net burn - is the single most important monitoring figure for an early company, because running out of money ends every other possibility. Fundraising time makes the real deadline earlier than it looks. (11 min)